Yes, ma'am. I'm Alfred Testa, Jr., Director of the 2037 OPERATING BUDGET - BILL 05 - 2/23/00 Philadelphia International Airport.
I sent you a letter regarding the affirmative action or minority participation.
I spoke with a staff member of yours and read the letter again because the letter that you sent me was not looking for a response but said, "I hope to discuss these things with you the next time we meet," and you had made an appointment with me and --
But in the meantime, I did call and ask for a report on minority participation.
Yes. On specifically the one around the contract for 2038 OPERATING BUDGET - BILL 05 - 2/23/00 advertising. And, two, I asked at the meeting, the last Airport full board meeting we had, for a report on minority participation of Mr. Beratan Jay Beratan?
I asked for a report on the minority participation at that time. And since then, I asked Tom Moore for an affirmative action on a minority participation plan for the advertising and including the master plan.
We have had in the past, since I've been on the Airport Advisory Board, a very -- a pretty good record of minority participation.
I asked who was at the table when you put out RFPs for response, and when those responses come back, who is at the table to determine who will receive the contract. I have been informed that MBEC, Minority Business Enterprise Council, is not at the table. 2039 OPERATING BUDGET - BILL 05 - 2/23/00
We have a procedure in which I was -- I've been here ten and a half months, ma'am. So when I first came here, we -- I'm used to setting minority goals according to whatever the trade will allow in a particular area because of who dominates the area and whatever. When I came here, I was told that that is not my duty, that I am to submit all of the contracts to MBEC, which we do. MBEC then sets all the goals for us, which we either meet or exceed in every single instance since I've been here. I have some numbers that I can show you but I am confident of the fact that I didn't know -- well, I'll put it this way. MBEC sets the goals for us and we submit every single request for proposal or contract for bid. MBEC is very much involved in the concession program. They set the goals, and we then meet or exceed every single 2040 OPERATING BUDGET - BILL 05 - 2/23/00 one -- I take that back. Probably 99.5 percent of those goals are either met or exceeded in every instance. On the advertising, I think you're talking about the advertising that went out for in the airport advertising?
And that -- the DBE is a woman-owned firm and that is from Pennsylvania. The other three are -- and if I can explain it to you. The Airport's in-house advertising --
Of which there's a goodly 2041 OPERATING BUDGET - BILL 05 - 2/23/00 percentage of Beach (ph.) advertising in that one. George, in fact, is in many of the contracts that we have because he just does an excellent job. I would probably hire George whether he met MBE requirements or not, only because that firm has done an excellent job for us. Since I've been there, anyway. The other advertising contract is -- there's only four firms in the country that do it. Two dominate the industry and two are very minor players. One's from the State of Washington, one is from Los Angeles, one is from Chicago, and one is from Allentown, Pennsylvania. The Allentown, Pennsylvania firm is a 100 percent woman-owned firm. We asked them, with MBEC, by the way, to increase the minority portion of her proposal, which she did, and she has met every single one of those goals. Their legal team is headed by Mr. Singley, and it goes on and on, and a lot of the construction of the -- and that's a very difficult one to meet. The construction of the display advertising, the maintenance of the display advertising and some of the sales. So she 2042 OPERATING BUDGET - BILL 05 - 2/23/00 has far exceeded MBEC's request. And MBEC was working with her, and that's pretty much done. The other advertising contract hasn't been finished yet because we're still negotiating that. We don't have money in this year's budget for that so it's in the current year budget that we're going forward with, which will have significant -- and is set by MBEC also, and MBEC does -- if we have a respondent to a bid that can't seem to meet whatever goal MBEC sets, MBEC then gets involved with us to try to find specific contracts to meet those goals in every instance.
Okay. In terms of this major construction that we're going to embark on, what level -- have we reached a point where you're discussing minority participation?
The minority participation -- again, I don't know the market that well. As I said, I'm ten and a half months in the area. I don't know. There are some instances where we may 2043 OPERATING BUDGET - BILL 05 - 2/23/00 be able to do 100 percent, some instances where we do 50 percent, and some instances probably not very many percent because of the differences. In airport planning, for instance, there are so many firms in the country that do airport planning, and we have to rework how they are meeting those goals. As far as the master plan is concerned, when we implement it, each project goes to MBEC to determine if -- if it's an air strip instrument system, that can only be supplied by a company like Rafion (ph.) and some of the others. So that would be an area where we probably wouldn't meet, although MBEC would set the goals a little bit lower. But an area for airfield lighting might certainly be 100 percent. So we work in those areas very closely in that area, but we don't have any goals yet. The master plan itself won't be finished until a year from now, a little bit more.
You'll let me know 2044 OPERATING BUDGET - BILL 05 - 2/23/00 how much money's in the budget for the Neighborhood Stimulus Program, the Duane Bumb program. What is in that program?
It's the Expanded Corridor Program, and we'll get that figure for you Councilwoman.
Thank you, Councilwoman. We had a follow-up question on the same issue from Councilman Rizzo.
I'd like to follow up if I could, Madam Chair, in regard to the Airport. Thank you. Mr. Testa, how are you today?
A few months back, we had some conversations about -- you were here about airport expansion. There was supposed to be a bill coming to Council, and it was withdrawn or cancelled. Could you give us a little bit of information about what's going on and what is the 2045 OPERATING BUDGET - BILL 05 - 2/23/00 status of airport expansion?
You mean the property we were looking to acquire in Councilwoman Verna's district?
We withdrew the bill only because we hadn't spent enough time in the community, and we are doing that right now with some community groups in the area with what can we do to invest in the local community within the law, clean up some areas that have become dumping grounds, and do some things in the area of -- and I really am not at liberty to say much more than that, except that we're working with those groups, trying to find a way that we can satisfy everybody's needs in the area. And that was the reason that -- it was done too quickly.
Well, yes, both. The term 2046 OPERATING BUDGET - BILL 05 - 2/23/00 "airport expansion" has certain connotations that some people --
Yes, we are. We're trying. I mean, we've been thwarted in one instance just the other day, so. . .
Okay, just one more question about the runway. You have a new runway at the airport?
Well, what's the -- I've heard a lot of criticism on the radio and TV and print media that it's not been a good investment. Is that true?
Hindsight's always 20/20. And I am not here to be here ten months and cast aspersions on anybody else.
So we have a runway that's too short to accommodate the modern aircraft; is that the bottom line?
Point of order, 2047 OPERATING BUDGET - BILL 05 - 2/23/00 Madam Chair.
I thought this was just a yield on the follow-up question. This is a whole new area of questions now.
Councilman Rizzo, was this the end of your questioning?
And then we'll call on Councilman Cohen and Councilwoman Brown. They've been waiting for a long time.
No, no. When I ask to yield, it's rarely, and it's on the specific point last discussed.
He's explaining 2048 OPERATING BUDGET - BILL 05 - 2/23/00 whole new areas on the airport. They're going to be here all during this time.
The runway that was designed first became a thought in someone's mind about or years ago. At that time, the focus 7 on technology was on short takeoff and landing 8 aircraft. It was the high-wind aircraft, two 9 turbo prop engines, and used very short runways. 10 And Philadelphia has been in mild cardiac arrest 11 for the past ten years at the Airport, in that it is a very delay-prone airport, especially lately. This runway was supposed to relieve some of the pressure off of the main two air carrier runways by putting a short takeoff and landing runway. When it was designed ten years ago, it was made for that. However, in 1997, the regional jet -- after this thing was designed and started, the regional jet -- a revolution came, and it's technology catching up before the ten-year period of building a runway. Is it totally useless? No. We still get some delay response. We may be able to lengthen it enough the other way. I can't lengthen it towards the water, towards the 2049 OPERATING BUDGET - BILL 05 - 2/23/00 Schuylkill anymore because the Kvaerner Crane's in the way.
We'll come back to that 'cause that was a little more than I was supposed to get into, sorry.
Councilman Cohen and then Councilwoman Brown. You've both been waiting a long time. Councilman Rizzo, we'll put you back down for the next round.
Does the Department of Commerce have anything to do with the conflict that seems to exist constantly between prime contractors and subcontractors on City work, in which the subcontractor at the end says, when they're about to get the last check, they only get 2050 OPERATING BUDGET - BILL 05 - 2/23/00 maybe a quarter of it or a half of it or a tenth of it, or sometimes no part of it, on the grounds that they haven't done the work properly or haven't completed their work and that, therefore, the contractor's going to have to expend funds. Does your department get involved in that?
No, we have not been involved in any of those issues, Councilman.
All right. Secondly, in large developments, there are a lot of developers around. In small neighborhood needed facilities, there don't seem to be many developers around because there's not much money there. Developers are interested in developing something that's going to yield a profit to them. Does the Commerce Department spend any time planning on what's needed in a commercial strip and come up with ideas as to how to strengthen it and then have some operation ready to, on its own initiative, to go out to the community and see how it can work with the community to build a viable commercial strip? And. 2051 OPERATING BUDGET - BILL 05 - 2/23/00 I address two strips to your attention and would like to know what, if anything, has been done along the lines of the question. The Broad and Olney business strip and the Chelten Avenue business strip.
To answer your question, the answer is yes. We have worked with over the last couple of years with the ICSC, International Council of Shopping Centers, that are a major organization for shopping center development. What we have done is produced detailed descriptions of our commercial corridors and offered them to them for development, i.e., we've looked at available land that the City has, we've looked at the demographics by way of population and income in order to encourage the private sector to take advantage of some of those inner-city developments. As I mentioned before, one of the things that we are proposing within this administration is to take that a step further and create a developers' round table and to identify particular neighborhoods around the City of Philadelphia with that type of potential for 2052 OPERATING BUDGET - BILL 05 - 2/23/00 expansion. And there are some positive examples where that has happened. If you look at North 22nd Street, where the development of the church was enhanced by the development of the strip mall next to it, it was a win-win situation, where the existing commercial corridor was able to take advantage of new development and coexist and actually thrive. We can look at Ogontz Avenue where that occurred as well. We're now looking at different corridors where we can achieve that same kind of synergy, as the Councilman mentioned earlier, where we include community groups as a part of that development to create a partnership and/or a joint venture. And when you speak of the specific strips Chelten Avenue and Olney Avenue, we have not been as active a partner in those two commercial corridors. Let me say this, though. That the vacancy situation is not acute in those particular corridors. We've had a lot of involvement in the past, and to some degree, have been successful in alleviating a lot of the 2053 OPERATING BUDGET - BILL 05 - 2/23/00 blight. There are CDCs, however, that we are prepared to partner with. If you look at the initiative that has been developed by Einstein and the development of that CDC, we have worked with them. And as a matter of fact, Francis Folk (ph.) is the corridor manager, I believe. Is Dave still here? Francis Folk is the corridor manager for that area and is looking at future development and, as a matter of fact, has some prospects for that corridor.
And, Councilman, let me add this. The Commerce Department is currently funding a market study for Broad and Olney, so I just wanted you to be aware of that.
Well, I could just say that I just think the Commerce Department has done almost zero. Even when presented with a specific problem at Broad and Godfrey, on the fact that a site had been used as a supermarket for 50 years no longer existed, that land was purchased by Rite Aid, that the community had great 2054 OPERATING BUDGET - BILL 05 - 2/23/00 objections to the elimination of the supermarket and sought help from the City to develop maybe a joint site with Rite Aid, 'cause the community was scheduled to fight the Rite-Aid development all the way, 'cause we were surrounded by Rite Aids but not by supermarkets. People have to leave the community to go into other communities to shop at a supermarket. We had a few smatterings of interest shown by the Commerce Department or PIDC -- I never can tell quite who's doing what between Commerce and PIDC. But there nothing of any substance and never of any real interest in it to make something happen. When there are big defendants involved, the City offers all kinds of assistance in loans, in contributions, in tax abatements. Nothing was done to try to encourage any supermarket to come into the area. And if there was space, additional space needed, nobody offered at Broad and Godfrey, We'll build a little garage or get the Parking Authority to produce something for the Community College so the Community College, which is the next-door neighbor, there can provide some of its 2055 OPERATING BUDGET - BILL 05 - 2/23/00 ground, you know, to make a larger space, if a larger space is needed. The City just let the -- and this is a viable neighborhood, with substantial incomes -- not an affluent neighbor, but a very viable working-class neighborhood, largely a minority neighborhood, but very stable over many, many years. The City just lets it lie there, shows no 10 interest unless we call. We hear nothing. What kind of planning do you do when you leave that happen? On Chelten Avenue, you have no vacancies because all of the stores are shut and boarded up. That's why there's no 15 vacancies; there's hardly any business there. Chelten Avenue, in the heart of Germantown, used to be one of the finest areas in the City. It struggled, but now there are a half a dozen businesses in Chelten Avenue, from Wistar Street, which is the equivalent of 22nd Street east of Broad, that would be a lot. And there are a lot of places just shuttered up, but nobody's ever shown any interest. That was a very viable area. And that's the reason I'm raising the question. What kind of planning and participation 2056 OPERATING BUDGET - BILL 05 - 2/23/00 do we do? And why can't community get the same kind of level of interest that the big business developments get? You know, for DisneyQuest, everybody comes in and says it's so urgent, and the Parking Authority does something I've never heard of -- to put all the money into it and ready to build a whole structure for many millions. And it's ready and the City's ready, apparently, to invest another $38 million. Maybe we're going to become the developer, and we'll call it the City of Philadelphia instead of DisneyQuest. But I think we need attention. I think Councilman Clarke raised this kind of a question from one point of view, I'm raising it from another point of view. What can we expect in this administration?
In reference to Broad and Godfrey, the Commerce Department was very much involved in trying to bring some relief to that situation by making certain that food services were available to the residents of that community. And the way we did this was to negotiate with Rite Aid to find out the amount, the maximum amount of square footage that would be 2057 OPERATING BUDGET - BILL 05 - 2/23/00 available for a grocery store operation, and then we went out and looked for operators that would be willing to come in for that square footage. It was not adequate for a major supermarket. However, most recently, considering some of the problems that Rite Aid is having, we are -- we have been checking to find out whether or not the entire site might be available for a supermarket, a larger supermarket. The footprint there could probably accommodate, at most, 30,000 square feet, which would be adequate for that area. However, it will depend completely upon whether or not Rite Aid is moving forward with its plans to build. If it is not, then we are going to try once again to put or to see if we can help a supermarket to develop there. There has been almost no supermarket development, Councilman, in the City, in inner-city locations that has been developed without the assistance of the Commerce Department. In fact, just a few blocks away from the location that you are talking about is a superb new supermarket that was developed by Triumph Baptist Church, and the Commerce 2058 OPERATING BUDGET - BILL 05 - 2/23/00 Department and PIDC played key roles in the development of that supermarket. The same thing with the supermarket at Fifth and Berks, the APM project. So -- and we will continue that work. And I'm not even trying to say that all of that work has been adequate, but we will continue working in the way that we have in the past.
Well, let me deal with that. Why would you only talk to Rite Aid as to what space is available? Why wouldn't you involve the community? 'Cause the community's got much more space involved than the Commerce Department ever thought that it was able to because we got approval of the Liquor Control Board. They were willing -- happy to move to another site, relocated to a another site for them, but nothing ever happened. Rite Aid -- why doesn't the City talk to Rite Aid and say, You've got one place about three blocks way, at Champlost and York Road and you have another site about six blocks away, at Broad and Chew. We need that site for a place, you need some cash, why don't we make an 2059 OPERATING BUDGET - BILL 05 - 2/23/00 arrangement? Why don't you agree to sell that to somebody, to the City of Philadelphia or to some company? And why didn't you go to the -- why doesn't the City of Philadelphia go to Pathmark, Shoprite, the whole string of supermarkets and say, We need a supermarket here, you're located in other areas. We do all kinds of things for you, because we do, and this community needs one and it can afford one. Why don't we get that kind of participation by the City?
Well, I think, Councilman, you have that kind of participation. And by that, I mean that we did talk to Rite Aid about whether or not they would be willing to give that site up for a supermarket. They were not willing. And by the way we did not choose who we were to negotiate with. At that point, Rite Aid owned that site and so we had no choice, we had to negotiate with Rite Aid. But what we are trying to do with them, as the owners of the site, was to get them to maximize of amount of square footage that could be made available to a food operator. 2060 OPERATING BUDGET - BILL 05 - 2/23/00 The amount that they were able to commit to was not sufficient for a Pathmark or a Shoprite or any other operators.
But there are all kinds of ways to enlarge that space. There's an enormous amount of space that Community College just got. It took over the old eye area, the optometry college that was there. And if somebody would spend some time with Community College, which we support, and assist them with whatever problems they think they might have by giving up a small amount of space to a large space, which is right next door, we could move somewhere.
There were two land owners that your office suggested that we negotiate with, and we did with both of them. Community College, to find out how much of that parking area could be given up to the site. We were told none. The other suggestion that came from your office was for us to get the site that is now operated by the gas station Merit, and they indicated no interest in selling their very viable business location.
Why didn't you 2061 OPERATING BUDGET - BILL 05 - 2/23/00 arrange meetings with the community and them? Because all, apparently, the City's negotiation consist of is a request for something available. And when the answer is no, that ends it. But that doesn't end it with the community, the community needs to have some creative ideas and is showing by the City that it's really interested and the City is prepared to do things.
All right, well we will take that recommendation under consideration. Thank you.
I have to say to my colleague that since that is my district, we have worked very closely with them, and I know that they have worked very hard to try to accommodate the idea of a supermarket on that space. I mean, sometimes you've got to be realistic. It is not realistic to expect Merit to 2062 OPERATING BUDGET - BILL 05 - 2/23/00 sell their gas station, it is not realistic for Community College to give up parking space, which they requested, more parking space. So while we are -- and we have been in touch with Rite Aid, and they're in the process of determining what they're going to do with that property, which still leaves us with the thought of how do we get a supermarket in a space that is there and is not going to be enlarged. So there's a realistic factor here we have to deal with. And I must say that the Commerce Department and PCDC did work very hard to help us resolve this issue. It may be ongoing, but I have to give you that support.
Thank you, Councilwoman. Were you involved with anything on 56th and Chestnut? You know, we have a new Rite Aid there. What was your level of involvement there?
That is not one of our commercial corridors that we are involved with.
So in other words, you have no level of involvement in that. 2063 OPERATING BUDGET - BILL 05 - 2/23/00 I will tell you, because as I said earlier, I have mentioned in the past that I have problems with not being included in plans in my area. Therefore, I went to Rite Aid. I have a supermarket, a Save-All coming in the spring. We'll break ground in spring. So what it has forced me to do, I have a ten-year economic plan for my district, but it has forced me to learn more about development overall and to certainly forge all kinds of meetings of my own with private entities when we assume we have your departments and MBAT and we assume we have the City to do that for us. So it's forced me to try to deal with my own issue of supermarkets. Penn has one coming at 49th and Walnut, and I have one 52nd and Chestnut. We held out a year. I had Rite Aid hold out a year. They built their Rite-Aid, we held the other half of the land for a supermarket, and we will have a Save-All there. But I've met with the developer, I've, you know, gone through all of these things, and this is what I'm doing in my district because I would like to see some things happen before I'm old enough to retire. 2064 OPERATING BUDGET - BILL 05 - 2/23/00 But we really, really believe that if you work with us, it makes it so much easier, and we need what you bring. But it puts us in an awkward position if an agency or a CDC or somebody in our area comes in says, I've been there and they're giving me this. It always puts us as a disadvantage. We're elected, we're the leadership in our area try. I try to provide that. I'm working on the other. As you know, my Raspino's (ph.) closed. There are a lot of rumor about the one at 58th and Baltimore, and I don't have anything going for 52nd. We need supermarkets. So I managed to do that, you know, we managed to get that done at 56th and Chestnut to bring that supermarket there. And then we were supposed to be a Pathmark at 40th Market, but that has fallen through since they want to wait and see what happens on their Glenwood Avenue site. But, you know, we're involved, we've involved in every -- we have formed, for example, a public-private institutional partnership with one of our parks, where I have $200,000 that is committed to a park. I have a private developer 2065 OPERATING BUDGET - BILL 05 - 2/23/00 who's going to invest private funds to do 75 houses around the park. And in the spring, my CDBG application will reflect that we want to focus on our neighborhood corridors, and that's on 52nd Street, so we do 52nd Street, we do housing and the park. We're across from the school, we've done it all. But it really has forced me to learn and tough it up when it would be a lot easier. If we were working more closely together, then you don't have to feel you have to tough it up. I mean, I physically go around my institutions, around the private entities, and do all of these things when it would be a lot easier if I didn't feel that I kind of have to tough it up by myself.
Well, I'm very sensitive to that and we'll absolutely make sure that we are a little more communicative in the future, but not to neglect that we have done things with you and are --
Oh, absolutely, absolutely. One thing that stands out in my mind is when we wanted an area fenced on 52nd Street, when Checkers fell out, when Checkers 2066 OPERATING BUDGET - BILL 05 - 2/23/00 decided they were not coming to Philadelphia and the company fell apart somewhere in New Orleans or wherever they were. And so in spite of all the work we had done a couple years to get a site ready for them on Market Street, they weren't coming. So we said, Okay, can we get it fenced? And PCDC said, Well, we have a fence, we could do it there or down the street. I said need the Checkers site fenced. So you fenced the one you chose. Please, you know. So what is the point. If you have a fence where, in one block, and I say that I need it here and you say that you need it there and we fund your agency, we expect a little consideration. That's all, that's all that's about. We're both in the business of trying to improve neighborhoods and trying to improve our city overall and our commercial corridors, and we just want a closer relationship so that we move ahead, and it helps everybody. You know, maybe I don't have to work so hard in that area if you have the expertise. It saves me time, saves me energy so that we can do other things. 2067 OPERATING BUDGET - BILL 05 - 2/23/00 And that's all we want. We want a close relationship so that when we move forward, we move forward with the City, we move forward with the community and the institutions. And everybody wins. Thank you. Councilwoman Reynolds-Brown?
Thank you, Madam Chair. If you could please turn your attention to your testimony, the last paragraph on and the top paragraph on and -14 of the Operating Budget, you give some discussion to the Cultural Fund. Well, implicit in the top paragraph is that the arts and culture do contribute to economic boom in the City. My question is, one, who offers up or makes the recommendation on the funding level for the Cultural Fund? And let me hear that answer first.
The recommendation would be -- would come with the City Representative's Office dealing with arts and culture.
Okay. The Culture Fund is how old, how many years old? 2068 OPERATING BUDGET - BILL 05 - 2/23/00
Okay. And the funding level for the past six years has been approximately . . . ? 'Cause for the last two years, according to this information, it's been 1.5. Has there been an increase over the last six years?
I'm told that two years ago, it was at a million, and it's at and a million five now.
So it has been an increase over the last two years. It remains at 1.5 for the Fiscal 2000-2001. Can you provide, if not at this hour, to the Chair a listing of those cultural organizations that are benefiting in terms of support grants from the Cultural Fund and the dollar amount they are given?
That would helpful, just to add some meat onto the information you provided in our your testimony.
All right, we'll do that. 2069 OPERATING BUDGET - BILL 05 - 2/23/00
Thank you, Councilwoman. Councilman Nutter didn't get his first go-round. We'll call on him next and then we'll go back.
Thank you. Good afternoon, gentlemen. Mr. Traylor, I preface my question by saying I understand that you're presently serving in the acting capacity, but I wanted to share with you a concern. I received a letter from one of my constituents dated January 3rd, and I received it on January 5th. A lady by the name of Joyce Cutler. She's in business in my district, on Ridge Avenue, in Roxborough. And she was trying to get some funding to help her get some of her affairs in order at the business. And, apparently, she was seeking somewhere in the neighborhood of 5 to maybe $15,000. 2070 OPERATING BUDGET - BILL 05 - 2/23/00 And I wrote a letter about a week or so later to D. Kaplan, at the Mayor's Business Action Team, sharing a copy of Miss Cutler's letter and what her needs were and some financial assistance she was trying to get for interior repairs and some capital needs for merchandise. Miss Cutler then -- or maybe the MBAT, sent a response back to Miss Cutler on January 28th saying, "Councilman Nutter has forwarded your letter requesting information about a grant for your business to the Mayor's Business Action Team. As I mentioned when we spoke on the phone, there are no grants available. We also discussed a small-business loan and the Neighborhood Facade Revitalization Program, in which you were not interested. "I am enclosing a copy of our services, the business directory, and some other materials you might find useful. If you'd like any other information, please contact me. "Sincerely, Shirley Simmons, MBAT Business Representative." Now, I wanted to share that with you in the context, this is a small-business owner in a 2071 OPERATING BUDGET - BILL 05 - 2/23/00 commercial strip that's having certainly some problems. You're very familiar with Ridge Avenue and a number of things that we're trying to do up there, and I guess it just becomes very frustrating, especially to the small-business owners, when they read about some of the things that we do here in the government and some of the businesses that we do, in fact, support at some fairly significant levels, but that we've apparently told a person no and there's nothing available for you because you, you know, want to pursue the measly sum of 5 to $15,000. I'd be glad to give you copies of this material, but I guess, could you just shed some light on this and share some perspective as to how we help people who don't necessarily either want or need a TIF or don't necessarily need a couple hundred thousand dollars or a Section 108 loan, and all the various other large incentive programs that we have for other businesses?
Now, I think that -- first of all, let me just say outright that I think that was an unfortunate response. I don't think the response -- even though I know where it 2072 OPERATING BUDGET - BILL 05 - 2/23/00 was -- the basic position that was being taken is, we do not give grants to for-profit businesses. And I understand that. However, I do think that that person should have been contacted and worked with in a way where we could meet that need in the best way that we have available to meet the need. I would appreciate it very much if I could -- if I could -- well, actually, I don't need it. I'll be able to get a copy of that correspondence from MBAT, and we'll make certain that there is a follow-up with Miss Cutler.
I would greatly appreciate it. Thank you very much. Thank you, Madam Chair.
Thank you, Councilman. Councilman Clarke, do you have any further questions?
I have a question of Mr. Testa. 2073 OPERATING BUDGET - BILL 05 - 2/23/00
What type of contractual relationship do we have with US Air and the other carriers at the Airport?
Carriers have a 30-year lease and operating agreement with the Airport that was renewed once before in, I think, 1984 for another 30 years -- I'm sorry, more years. It 13 is ending in the year 2006. 14
Not all the gates and all 16 of the areas are leased in that way. There are 17 some old ones. All the new gates that we build 18 are leased on a preferential basis so that we can 19 make better use of them. 20
And what's in the language in that contract? Give me a summary. I know can't talk about all of it. I mean, what do we talk about in those contracts?
We talk about leases for space, their counter space, their airline ticket 2074 OPERATING BUDGET - BILL 05 - 2/23/00 office space behind the counters, the gates they rent, the operation space they rent, the amount of ramp that they part their aircraft on, and they pay landing fees every time they land. That's just some of the things. There are also all sorts of federal requirements that they must follow up because the Airport really is run under federal law mostly. And that contract describes the relationship between the Airport as the landlord and the airline as the tenant for airlines. Now, some of those airlines are the old -- signers of the old documents, which originally started in the '40s and then just kept re-upping. Some of the newer agreements we have with some of the later airlines do not contain such restrictive language. Some of that language has what's known as "a majority and interest clause," in which they have the right to pass on any capital development of a million dollar or more. I think it's a million. It's called "a majority in interest clause." It's old-fashioned clause, which will be phased out into 2006. And if I'm still here, 2075 OPERATING BUDGET - BILL 05 - 2/23/00 we've already talked to the airlines and said they'll never get it back again.
Okay. When we have those types of discussions leading up to the ultimate signing of the contracts, do we talk about the operation of the airline itself? As an example, US Air right now is the dominant carrier out of our --
It's not as dominant as everybody thinks but, yes, they are the dominant carrier.
Okay. But there appears to be a disparity in the rates.
You're right. Okay, we'll talk about ticket prices, Councilman.
That's the layman's, the ticket prices. I'm saying "the rates." I'm a councilman now, I'm supposed to say "rates."
The rates, not only in the Airport itself, US Air versus Delta versus 2076 OPERATING BUDGET - BILL 05 - 2/23/00 some other carrier, but when it -- what I'm told that if I go to --
-- Baltimore, BWI, if I go to Newark, it's like half the price and as a result of continuing negotiations. Is that going to be a part of the discussion with --
No. We cannot -- under federal law, we cannot interfere in or dictate rates, routes, and charges of the airlines. That is an absolute since 1958. However, in my past and former life in Manchester, we were one of the highest-priced airports going, and before I left, we were one of the ten cheapest airports in the country going coast to coast on $99. And solution to that is competition. And we, as a staff and an airport, are very much involved in bringing in competitive airlines, or trying to bring in low-cost service to compete with the higher-cost airlines. In some routes -- on some routes, we do have lots of competition. To Orlando, you can get a ticket for under 200 bucks. 2077 OPERATING BUDGET - BILL 05 - 2/23/00
Orlando, if you stay a Saturday night -- no, not during vacation time.
I've been trying to get tickets to Orlando for the last two weeks, and I cannot get below $500.
I hear you. If you wish to travel in March, April, please look for -- AirTran has announced --.
They have all brand-new aircraft. I mean, AirTran has announced five new flights --
Oh, US Air can make its own prices, and it does so because it has most of the flights. However, you can fly ATA to Florida for inexpensive dollars, AirTran for inexpensive 2078 OPERATING BUDGET - BILL 05 - 2/23/00 dollars, and hopefully, when you get done, you'll fly many airlines to many routes, and --
So do I -- I guess what I'm trying to get at is, when we negotiate the --
-- every individual carrier, I mean, do we do a blanket lease where everybody pays the same? Or do we take into account how much --
Under our federal law, every airline and every tenant must be treated equally. It's called "the most favored nations clause" in airline leases. You have to charge exactly the same rate to all airlines -- same landing rate, same lease rate, same --
Regardless of their profit margin and the ability to pay --
Regardless of what their profit margin and their ability to pay, yes.
Well, it was to try to provide a level playing field for airlines, both entrant and long-established. At one time, 2079 OPERATING BUDGET - BILL 05 - 2/23/00 dominant airlines in the '40s and '50s had a very varied structure, and if they controlled an area, the rates for new-entrant airlines were up here, and it was very difficult to bring in entrant carriers. Since 1958, when the first Federal Aviation Act was introduced, that has said no, you must charge the same, you must treat everybody equally under federal law. And that, we must do under federal law. Now, believe me when I tell you, competition is the king. Capitalism works very well in airports, and when you have enough demand and there's enough competition bringing in, if you'll give me some time, and I'm talking a couple of years, you may see all of those rates drop to comfortable levels. As far as other airports are concerned, yes, the disparity to fly from certain airports is very, very high when they're dominant hubs, like Atlanta, which is 90 percent Delta, or Chicago, which is between American and United. We're only 60 percent US Air, so we have a much better --
By also encouraging the expansion of US Air, we'll probably hurt 2080 OPERATING BUDGET - BILL 05 - 2/23/00 ourselves as it related to having a competitive edge.
I don't want to carry on a long conversation, but yes and no, because if we have --
Okay. I have all the time. If we encourage US Air international, and I will tell you, Air France is starting a rival route to Paris this March because of US Air's routes to Paris, two a day, so we'll have three a day to Paris. And because of competition, the more US Air competes in the international field, the more we can encourage them to do more, which they are doing. We will encourage foreign airlines then to come in and compete with US Air. On the domestic side, I am engaged right now in designing some gates that we control, until we re-look at the entire airport, that we are trying very hard to get some low-cost service 2081 OPERATING BUDGET - BILL 05 - 2/23/00 into the Airport to compete on those routes. AirTran is one, nonstop service to Florida. I think it's two to Orlando, two to Fort Lauderdale, and one to Tampa, or something like that. That is, believe me --
Yeah -- no, I recently was on AirTran and I'm not going to talk about that.
Well, you know, I don't want to talk about that, it might be libel. But, okay, when we talk about the different airlines, I mean, you have AirTran and then you have US Air. The reality is, as it relates to the type of airplanes they have, it's not comparable. I mean, let's --
They put you on an older one, I'm sure. Believe me, the airline has changed, but the ATA has all brand-new -- five -- 2082 OPERATING BUDGET - BILL 05 - 2/23/00 you can fly to Florida from here on any airline -- Northwest, United, all the major airlines fly, but you'll have to fly through a hub. The only nonstop service is ATA, AirTran, and US Air.
Yeah, Cincinnati with Delta. Northwest has a very inexpensive flight, but you have to go to Detroit and then south, but when it's only $225, I wouldn't -- I would recommend that the more you vote with your pocketbook and feet, the more -- it's very difficult to get an airline to reduce its prices when its planes are full every day.
Right, okay. So it's either the federal law or competition, and you're working on the competition.
Yeah, we're working on competition because it's the slickest way to get it done. And I can give you Baltimore, Providence, Manchester as three concrete examples of not being able to dictate prices. But those three airports -- and especially Providence and Manchester being two of the highest-priced 2083 OPERATING BUDGET - BILL 05 - 2/23/00 airports in the country now are two of the top ten cheapest airports in the country because you've brought in enough competition for the marketplace.
Now, this is a much bigger market, so I've got to bring in a lot more competition.
And we're working on that very hard right now, and I've got lots of miles on my shoes and holes in my soles from doing this.
If you want to call me, please do, and I'd be glad to go over everything with you.
I'm going to call you, all right, great. Thank you. Thank you, Madam Chair.
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madam Chair. 2084 OPERATING BUDGET - BILL 05 - 2/23/00 I want to give Mr. Testa an opportunity to finish his response when I asked about the runway. Before you got here -- and you've driven the Schuylkill Expressway -- we had a similar situation where we designed and built a road, and the day it was opened and they cut the ribbon, it was considered antiquated.
Is there a way when we make this -- and I'll use the word -- when we make the Airport larger that we can then do some expansion to that runway to get it up to the standards that are required there to support the aircraft need that runway?
Yes. Right now, we are working on a master plan. We'll have several alternatives. Some of those alternatives will take that runway and lengthen it towards the terminal building. Our constraints are Kvaerner Crane on one end and the terminal building on the other end, and it blocks the runway in. If we could lengthen it, that would mean destroying the present terminal complex and building a new 2085 OPERATING BUDGET - BILL 05 - 2/23/00 terminal complex, but that would all be in the master plan, which will be available and ready -- we'll keep the Council informed as to that. There are ways to do it, and we can make that airport work. Philadelphia's halfway between Washington and New York. Unfortunately, the mentality is, we're halfway between Washington and New York. I think with all the (unintelligible) of tax money, not one penny of tax dollars, we can build an airport that truly screams "Philadelphia" and can be the slickest, neatest, best airport on the East Coast. I wouldn't have taken this job if I didn't believe that deeply, and in the process of doing so, create one of the best transportation experiences from Amtrak to SEPTA to watercraft to the airport. I think we can do that.
My final question. Presently, the Philadelphia Parking Authority manages the parking operations at your airport?
I can't figure why -- you do a lot of things and do them well, and the constant -- the constant response that I get 2086 OPERATING BUDGET - BILL 05 - 2/23/00 to that question is that you don't know anyone about running a parking lot, you run an airport. Could you run the parking operations down there? And are there other airports that run their own parking operation throughout the country?