COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COUNCIL COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, December 2, 1998 9:45 a.m. - - - BILL 980759 - Capital Redevelopment Asisstant Program application. BILL 980782 - Parking Authority bill. BILL 980791 - Water Department Bill 13 BILL 980792 - " " " BILL 980793 - " " " BILL 980679 - Related to City Depositories. (Full text of all bills within transcript and attached.) PRESENT: COUNCILWOMAN ANNA CIBOTTA VERNA, Chair COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN MICHAEL A. NUTTER COUNCILMAN W. THACHER LONGSTRETH - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 I N D E X Bill 980759 Robert Fina, Senior Vice President. . . . . . Philadelphia Industrial Development Corporation Bill 980782 Thomas Queenan, Treasurer . . . . . . . . . . City of Philadelphia 9 Rina Cutler, Executive Director . . . . . . . 23 10 Philadelphia Parking Authority 11 Barbara Morris, Esq. . . . . . . . . . . . . 32 Duane, Morris & Heckscher, counsel to Parking 12 Authority 13 Vince Robb, Controller. . . . . . . . . . . . 46 Parking Authority 14 15 Bill 980791, 792, 793 16 Thomas Queenan, Treasurer . . . . . . . . . . 75 City of Philadelphia Kumar Kishinchand, Water Dept. Commissioner 79 Bill 980679 Thomas Queenan, Treasurer . . . . . . . . . . 89 3 12/2/98 FINANCE COMMITTEE - Bill 980759 P R O C E E D I N G S
Good morning. I apologize for the delay. This is the public hearing for the Finance Committee I would ask the clerk to please read the title of Bill No. 980759.
Bill No. 980759, an ordinance authorizing the Philadelphia Authority for Industrial Development ("PAID") to file an application with the Office of the Budget, Commonwealth of Pennsylvania, under the Capital Redevelopment Assistance program, in an aggregate amount not to succeed $76,400,000 to assist in the development of the Asociacion De Musicos Latinos Performing Arts Center, the Congreso de Latinos Unidos, Inc. Community Center, the Freedom Theater, the Gateway Visitor Center on the Mall in Independence National Historic Park, the Lonnie Young Recreation Center, the Point Breeze Performing Arts Center, the Regional Performing Arts Center, the Please Touch Museum, the Rock School Ballet, and the Zoological Society of Philadelphia Primate Project.
Good morning. 4 12/2/98 FINANCE COMMITTEE - Bill 980759 Please identify yourself for the record.
Good morning, Councilwoman Verna and members of the Finance Committee. My name is Robert Fina. I am Senior Vice President of the Philadelphia Industrial Development Corporation, and am appearing on behalf of the Philadelphia Authority for Industrial Development (PAID). I am here today to testify in support of Bill No. 980759 authorizing PAID to apply for redevelopment assistance grants from the Commonwealth of Pennsylvania in an aggregate amount of $76,400,000 for ten redevelopment assistance projects. The funds will be used to assist in the development of the Asociacion De Musicos Latino Performing Arts Center, the Congreso de Latinos Unidos, Inc. Community Center, the Freedom Theater, the Gateway Visitor Center on the Mall in Independence National Historic Park, the Lonnie Young Recreation Center, the Point Breeze Performing Arts Center, the Regional Performing Arts Center, the Please Touch Museum, the Rock School Ballet, and the Zoological Society of Philadelphia Primate Project. 5 12/2/98 FINANCE COMMITTEE - Bill 980759 Bill No. 980759 will authorize PAID to enter into agreements with the City to apply for State funding, enter into agreements with the Commonwealth's Office of the Budget to carry out the purposes of City Council's ordinance, designate the City and/or the project recipients to assume the requirement of the full match for each project respectively, designate the City/and or the project recipient to reimburse the Commonwealth for its share of any expenditure found to be ineligible by the Office of the Budget, and obligate the City and/or the designee to complete the projects within a mutually agreed-upon time frame between the Office of the Budget and PAID, including reasonable extensions requested by the City; or the City will reimburse the Commonwealth for any State funds expended for the project respectively. Exhibit A of the ordinance provides project descriptions for each of the ten projects seeking funding from the Commonwealth. Therefore, I will not include such in my testimony. However, I will briefly identify the project and the amount of State funding being sought in a process by 6 12/2/98 FINANCE COMMITTEE - Bill 980759 which the Commonwealth accepts applications for funding from PAID. Asociacion De Musicos Latino Performing Arts Center, at Fifth and Huntington Streets, seeks $2 million in development assistance. Congreso De Latino Unidos, Inc. Community Center at at Sommerset and American Streets seeks $2,500,000 of redevelopment assistance. Freedom Theater's John E. Allen Theater, at Broad and Jefferson, seeks $3 million. The Gateway Visitors Center on the Mall in Independence National Park seeks $10 million in State redevelopment assistance funding. The Lonnie Young Recreational Center, at Chelten and Ardleigh Street, in West Oak Lane, seeks $1 million. The Point Breeze Performing Arts Center, in the 1600 block of Point Breeze Avenue, seeks $12 million. The Please Touch Museum, currently located at 21st Street, near near the Franklin Institute, but may relocate to Penn's Landing, seeks $5 million. 4 million had been previously awarded by the Commonwealth to the Performing Arts Center project. The Rock School of the Pennsylvania Ballet, at Broad and Washington Avenue, seeks $1 million. 5 million. To apply for State redevelopment assistance funding, the Commonwealth's Office of the Budget, or the Governor'S Office, must, in writing, authorize PAID to submit an application to the Office of the Budget. The Commonwealth's House of Representatives in the Senate of the State must first have included the project by name and amount and the amount of State funding in the current approved State Capital budget. The State funds must be matched dollar for dollar with non-Commonwealth funding. 8 12/2/98 FINANCE COMMITTEE - Bill 980759 Prior to PAID submitting a preauthorized application for State funds to the Office of the Budget, 50 percent of the non-Commonwealth funding must be committed to the project.
The Commonwealth will fund a project only after the application has been approved, and all funding necessary to complete the project has been verified to be available. The Office of the Budget reimburses the City's designated project recipient for construction and acquisition costs after proof that funds have been expended. The Office of the Budget also requires many other procedureal actions that are too numerous to recount here but that PAID monitors for compliance. It should be noted that under the previous administration in Harrisburg, Governor Casey's administration, similar requirements were imposed by the Office of the Budget for 14 projects, with $34,272,000 in redevelopment assistance, with a combined total cost of $339 million. I am pleased to advise, although demanding and time-consuming, all 14 projects were completed in accordance with the Commonwealth's 9 12/2/98 FINANCE COMMITTEE - Bill 980759 requirements. I again request the Finance Committee's favorable recommendation of Bill No. 980759, and that the rules of Council be suspended to permit first reading at the next regularly scheduled session of Council. Should you have any any questions, I would be pleased to answer them to the best of my ability, either now or at a later date.
Thank you. As I understand it, the projects listed in the bill 13 have all been proved by the State?
They're all approved in the State Capital Budget -- all listed in the State Capital Budget, and the Budget Office has authorized us, with the exception of Freedom Theater, where the governor had publicly said he will authorize it, but we have not received a letter for that project yet.
Mr. Fina, what are the full matching requirements for each project and who is responsible for the match, the City or the project recipient?
If it's the City, are the funds provided for in the current five-year plan?
That's a very good question. What we do is, we require each recipient of the dollars -- the ultimate project identified name -- to provide the matching dollars. However, the City must agree that if the matched dollars cannot be provided and the project fails, any State funding that has gone into the project must be reimbursed to the Commonwealth by the City. What PAID does, and what we've done under the 14 other projects, we do not request State funding, so there's no problem for the City to meet that obligation until the dollars are spent appropriately and it's on a reimbursement basis. So the dollars will not flow to the project until we are absolutely certain that the dollars are funded properly and that the match is there. We verify that. And, candidly, the Commonwealth will not release any dollars until they're sure the matching dollars are available. So although 11 12/2/98 FINANCE COMMITTEE - Bill 980759 technically, it is the City's requirement, procedurally, we make certain that the City will never have any obligation, any real obligation.
In your testimony, you state that projects have been completed 7 with over $34 million in redevelopment assistance 8 from the State. Would you please provide the 9 committee with a list of these projects and the 10 purpose of the funding and their location in the 11 City. 12
I could attempt to give you 13 all 14 now, but I think it would be better if I 14 gave you a written statement, but I can give you a couple ideas. The Capital Project on South Broad Street that the School District did, the Wilma Theater, the Brandywine Theater. The Freedom Theater received previous dollars to do part of their project, a joint venture on North Broad Street re some of projects that were successfully completed, but I will provide you with a detailed list.
Would you, please. 12 12/2/98 FINANCE COMMITTEE - Bill 980759 Are there any questions from members of the committee?
I just wanted to say for the record that I am a member of the Board of PAID and have been since it was first form several years ago. And I've also been a board member and a member of the Executive Committee of PIDC since 1964.
Hardly a man is alive who now remembers. (Laughter.)
Mr. Fina, is there a need for a suspension of the rules on this?
Yes, I've asked for that, and I would appreciate it if the committee would favorably consider that.
Is there anyone 13 12/2/98 FINANCE COMMITTEE - Bill 980782 else to testify on this bill? Councilman Nutter, do you have any questions?
Councilwoman, I have no questions of Mr. Fina today; I may have some tomorrow, but I have none for him today.
I'm willing and ready to answer any questions that Councilman Nutter may pose. Thank you.
Is there anyone else to testify on this bill? (No response.)
Hearing none, the clerk will read the title of Bill No. 980782.
Bill No. 980782, an ordinance authorizing the Director of Finance and the Commissioner of Public Property to enter into certain agreements with the Philadelphia Parking Authority ("The Parking Authority") and to take other actions with respect to the Parking 14 12/2/98 FINANCE COMMITTEE - Bill 980782 Authority as are necessary to enable the Parking Authority to proceed with a commonly financed, multi-site, off-street parking facilities acquisition, construction improvement, repair and refinancing project. Such agreements, approvals and actions to include: a service agreement between the City and the Parking Authority whereby the City obligates itself, if and as necessary to appropriate and make certain payments in respect of debt service on Parking Authority bonds issued to finance the project, including refunding of certain outstanding Parking Authority bonds.
I believe everyone has a copy of the testimony. Good morning. Please identify yourself for the record and proceed with your testimony.
Yes, good morning. My name is Thomas Queenan. I'm the Treasurer for the City of Philadelphia. Before I get started with my written testimony, I'd like to offer up a couple of changes -- very, very minor to the ordinance. If I can give you a copy or refer to of the pink sheet. 15 12/2/98 FINANCE COMMITTEE - Bill 980782
Yes. They're extremely minor. It's just changing a word in two places. On , the first paragraph at the top where, in parentheses, it says "the appendix," that should actually say "the sublease."
In the parentheticals in the very first paragraph on the top of the pink ordinance bill, the word "appendix" should actually read "sublease." A second change is very similar. The paragraph beneath that, the B paragraph, where it says "the appendix shall. . ." It should actually say "the sublease." And that's the extent of the changes. I'm sorry. That was just picked up by our counsel.
Also noted by my counsel is a couple of additions to my testimony that I've submitted, so actually I'm going to read my entire testimony with the changes, some additions to my 16 12/2/98 FINANCE COMMITTEE - Bill 980782 actual written testimony for the record. I appear today with Rina Cutler, the Executive Director of the Philadelphia Parking Authority --
I have extra copies of my testimony. Okay, I'm here today with Rina Cutler, the Executive Director of the Philadelphia Parking Authority. Miss Cutler and I will testify in support of Bill No. 980782. The purpose of Bill No. 980782 is to authorize the Director of Finance and the Commissioner of Public Property to enter into certain agreements with the Philadelphia Parking Authority and to take other actions with the Authority pursuant to a commonly financed, multi-site parking facility acquisition, construction and improvement, and refinancing of certain outstanding Philadelphia Parking Authority bonds. The total size of the proposed Series 1999 Parking Revenue Bonds is approximately $65 million. The Series 1999 Bonds will refund 17 12/2/98 FINANCE COMMITTEE - Bill 980782 the outstanding Series 1979 Parking Revenue Bonds and the outstanding Series 1975 Parking Revenue Bonds, for an estimated present value savings of 3 percent. The Series 1999 Bonds will also fund: acquisition of property and construction of a garage facility at 20th and Walnut Streets in an amount of $26 million; renovations to the Independence Mall Parking Facility, in an amount of $16 million; development of two parking lots for Freedom Theater, in an amount of approximately $.4 million; and general improvements to existing garage facilities in an amount of approximately $2 million. The Series 1999 Bonds will fund the above-referenced projects pursuant to a single indenture that will pledge the revenues of these facilities, the mini system, for payment of the bonds. The City will support the system by obligating to budget money to fund any debt service reserve fund deficiencies that may occur in a current year in the next fiscal year. This frame work will be an improvement to how the City currently advances funds to restore debt service 18 12/2/98 FINANCE COMMITTEE - Bill 980782 reserve funds on existing garages. In the past, the City has secured funds the debt service reserve funds for each garage pursuant to a single indenture. If revenues of the single garage were insufficient to meet the debt service requirements of that garage, funds from another garage that generated surplus revenues could not be used to assist in payment of debt service on the weaker garage. Therefore, the City was obligated to fund a deficiency, if any, of an individual garage. For example, the outstanding Series 1975 Bonds financed the construction of the Ninth and Filbert Streets garage. This garage has had difficulty generating sufficient revenues for debt service payments and the Debt Service Reserve Funds. As a consequence, the City has been contributed $250,000 a year towards the Debt Service Reserve Fund for this garage. By including this garage into the mini system, along with a reduction of the debt service payments via the refunding of the Series 1975 Bonds, sufficient revenues will be available debt service expenses for the Ninth and Filbert Street 19 12/2/98 FINANCE COMMITTEE - Bill 980782 garage. Therefore, the $250,000 payment currently made by the City will likely be discontinued. The Series 1999 Bonds will be fixed-rate bonds in demoninations of $5,000, interest will be payable semiannually, the bonds will be issued as revenue bond debt secured by revenues of the Philadelphia Parking Authority projects listed above. We expect to pursue provision of bond insurance for all bonds. Therefore, such bonds will be rated AAA. None of the revenue bond debt will have any recourse to the revenues of the City General Fund, but are subject to the obligation of the City to advance funds from annual appropriations if there are deficiencies in the Debt Service Reserve Fund. So that's my added language.
So that's the part that was not included in your testimony yesterday.
Yes. And I can provide you with this sheet once I'm completed, by the way.
Could you repeat that part there? 20 12/2/98 FINANCE COMMITTEE - Bill 980782
Sure. I'll start with the -- therefore, such bonds be rated AAA. None of the revenue bond debt will have any recourse to the revenues of the City General Fund, but are subject to the obligation of the City to advance funds from annual appropriations if, there are deficiencies in the Debt Service Reserve Fund. So in other words, as described earlier --
Okay. The way that we have typically done garage financings for the City of Philadelphia is that the City has obligated to pay any deficiencies in the Debt Service Reserve Fund of a particular garage. So as I used the example of Ninth and Filbert Street, this is a garage that was built in 1975. It doesn't generate enough revenues to pay the debt service on the bonds and to fund its Debt Service Reserve Fund. So as a consequence, it's about a $250,000 shortfall in the Debt Service Reserve Fund. And the City is obligated to actually fill 21 12/2/98 FINANCE COMMITTEE - Bill 980782 that reserve fund back up on an annual basis, which we did last year, in the amount of $250,000. This transaction's creating a mini system so that the four projects that I've described -- 20th and Walnut, Freedom Theater parking lots, the Independence Mall parking facility, and the garage at Ninth and Filbert and Second and Sansom -- are going to be put into a single system. So that if one of these garages doesn't generate enough revenues to support itself completely, by combining them, we --
So the City is relieved of the burden it has passed on to the conglomerate of --
Right, so the burden that the City has for the single garage will cover these four systems, but the four garages in the system should be sufficient enough to take care of one another.
And so it's the same kind of an obligation that the City had on the single garage. The City will continue to have that obligation on the four. However, by having these four facilities in one system, the likelihood of the City having to provide additional funds is lessened.
And, Mr. Queenan, this is the first time we're attempting to do something like this?
Yes, it is. It's the first time that we're actually looking to combine four facilities into a single indenture versus continuing to do a facility with a single indenture, which we've done in the past.
Just one other item. The preliminary schedule for the sale of these bonds is mid-December '98, with a projected closing date of January. Just a moment, please. (Mr. Queenan briefly confers with a colleague.) 23 12/2/98 FINANCE COMMITTEE - Bill 980782
Therefore, I respectfully request a suspension of the rules pursuant to this ordinance. Attached is a copy of the financing team. That concludes my testimony I'll turn it over to Miss Cutler to provide testimony about the proposed use of bond proceeds. Thank you.
Good morning, Councilwoman Verna, members of the Finance Committee. My name is Rina Cutler. I'm the Executive Director of the Philadelphia Parking Authority. I appreciate the opportunity to testify this morning in support of Bill No. 980782. This bill will allow the Philadelphia Parking Authority to proceed with two garage projects and to refinance two bonds issues related to two existing garages. Ordinance components. Item number 1. Approval of the issuance of parking revenue bonds through the approval of a contract between the City of Philadelphia and the Philadelphia Parking 24 12/2/98 FINANCE COMMITTEE - Bill 980782 Authority to advance City funds to a bond reserve fund in the event revenues from the four garages are insufficient to pay the operating costs and the debt service on the bonds. Items 2 and 3. Two subleases relating to the independence Mall project. The first is a sublease between the City of Philadelphia and PAID for a portion of the facility to create the subterranean level of the Visitors Center and new exits from the parking garage to the new Visitors Center. The second is an extension to 2027 of the sublease between the City and the Parking Authority for the balance of the Independence Mall garage. Item 4 is the approval for the Parking Authority to utilize the air space above Moravian Street and the subterranean space below Moravian Street to construct a new garage project, which is a mixed-use development in the Rittenhouse Square neighborhood of the City. The following projects totalling $65 million are proposed to be financed through the issuance of Parking Authority parking revenue bonds: 25 12/2/98 FINANCE COMMITTEE - Bill 980782 26 million for the acquisition and construction of a mixed-use development at 1907 to 1915 Walnut Street, 127 to 129 South 20th Street, and 1904 to 1926 Sansom Street. This development will consist of a 615-car garage, levels of 7 parking, as well as a 7500-square-foot restaurant, 8 and a 36,000-square-foot, 8-screen movie theater. 16 million for the Independence Mall project. These monies will be used to upgrade the current facility and include the following improvements: bring the garage into compliance with current ADA requirements by installing elevators to the surface; new lighting and signage; new revenue control equipment; concrete repair and a new waterproofing system; new electrical, mechanical, and plumbing systems; and the construction of a three-level great room 19 atrium space, which will connect the parking garage directly into the new Visitors Center. Refinance the 1979 bonds which were issued to construct the Parking Authority's 615-space parking facility at Second and Sansom Streets. The debt service on this garage is currently guaranteed by a 1979 City contract. 73 million. Refinance the 1975 bonds which were issued to construct the Parking Authority's 850-space parking facility at Ninth and Filbert Streets. " The debt service on this garage is currently guaranteed by a 1975 City contract. 88 million. 400,000 for two new neighborhood parking lots which will be leased to Freedom Theater as part of the Parking Authority's commitment to the Avenue of the Arts North. These parking lots allow Freedom Theater to provide adequate off-street parking for their facility as well as other neighborhood parking needs. Approximately $2 million for upgrades and capital improvement at other Parking Authority garage locations. There are several benefits to this financing plan. The first combines the City's obligation to fund debt service reserve fund deficiencies into one City contract so that stronger garages pay debt service before the City is required to provide funds. This is projected 27 12/2/98 FINANCE COMMITTEE - Bill 980782 to eliminate the City's current annual payment obligation in the amount of $250,000 for the Ninth and Filbert garage.
This combines revenues from four garages to pay debt service, which results in a stronger system anticipated to be self-supporting. All excess revenues flow to the Parking Authority to pay City rent and charges that are now trapped under the current bond indenture. Refunds the 1975 and 1979 bonds to create savings and provides financing mechanisms for new garage projects as well as capital improvement to Philadelphia parking garages. In addition to this testimony, a briefing package has been prepared and submitted to City Councilmembers. This package reflects my previous comments as well as Philadelphia Parking Authority revenue numbers since 1992. It also includes financial projections for revenues and costs associated with the 1999 bonds. Thank you for allowing me to testify in support of Bill No. 980782. I will be happy to answer any questions you may have.
Before we move to the next section, again, Thomas Queenan, City 28 12/2/98 FINANCE COMMITTEE - Bill 980782 Treasurer. Yesterday, we sent over a revised Appendix B. Was that made available to all?
And there should have been a Summary of Changes Sheet that accompanied it, and I forgot to read that into the record, that that is also a change in the ordinance, that there has been a revision to Exhibit B. And there's a two-page summary sheet on top of it that describes the summary of changes.
But it's not an amendment to the bill; it's an amendment to the exhibit?
Yes. It's been revised pursuant to the items listed under Section A, which provides that we --
Well, I'll read what I have here, the brief overview of the changes to the Sublease Agreement: One is, the title of the document has changed so that it no longer refers to a 1959 29 12/2/98 FINANCE COMMITTEE - Bill 980782 Master Agreement, and references to the Master Agreement have also been deleted.
I'm sorry, Madame Chair. Mr. Queenan, are you talking about this document that says "Summary of Changes to Exhibit B?"
Okay. And now you're talking about changes in this Exhibit B document?
What I can offer to you, as counsel is here who produced this particular document, and I believe that the scope of the changes have more to do with the legal aspects of preparation of the document. I can have that person available to speak to you as well if there 30 12/2/98 FINANCE COMMITTEE - Bill 980782 are any questions.
Yeah, we'd like to know what the changes are. And do these changes need to be amended into the Exhibit B document?
We're actually substituting the Exhibit B that we had sent over with this new Exhibit B.
Okay. Yeah if you can get us the explanation on the changes.
If there are any outstanding questions, we have counsel available to provide additional clarification. But the first one, as an overview, is the title of the document has changed so so that it no longer refers to the 1959 Master Agreement, and references to the Master Agreement have also been deleted. Two, generally the basis for calculating parking charges was revised. 31 12/2/98 FINANCE COMMITTEE - Bill 980782 Three, the calculation of rent payable to the City is set forth in the Sublease Agreement rather than in the reference to the Master Agreement. And, item 4, paragraphs 11(b) and (c) in Section 12 were inadvertently omitted due to computer error and now have been inserted. So the changes refer more to typos as well as to changes in references from, for example, the 1959 Master Agreement. That reference has been changed out of the document. Calculation of parking charges has been revised. And the calculation of the rent payable to the City pursuant to the Sublease Agreement has also -- is referenced actually in the Master Agreement versus the sublease.
Mr. Queenan, for instance, this item 2, the basis for calculating parking charges was revised. What was it and what was it revised to and why? 32 12/2/98 FINANCE COMMITTEE - Bill 980782 (Barbara Adams comes forward.)
Barbara Morris. I'm with Duane, Morris, and Heckscher. We're counsel to the Parking Authority. This Sublease Agreement was drafted by the City Solicitor's office, and we provided input into that process in order to meet the needs of the Parking Authority with respect to the Independence Mall garage space. We observed -- the reason -- you'll recall Mr. Queenan advised you of the change in word to the ordinance from "appendix" to "sublease."
The term "appendix" had been used because the Solicitor's office had been accustomed to drafting these documents as appendices to a 1959 Master Agreement. We need a little background till I get to your question.
There is no reason to do it that way. The 1959 Master Agreement set up certain requirements for what parking charges had to reflect -- certain expense components. And we 33 12/2/98 FINANCE COMMITTEE - Bill 980782 when we deleted the references to the Master Agreement, we had to insert into this sublease all of the requirements with regard to calculating those parking charges which had been in the Master Agreement. In addition, there were certain modernizations to language to conform with the indentures that were made.
Miss Adams, one quick question just for background purposes. Who is the Master Agreement between, and who is the Sublease Agreement between?
The Master Agreement was between the City and the Parking Authority, but it basically was structured to anticipate that the City finance the garages, that the City issue bonds and finance garages which it then leased to the Parking Authority. So the terms of the Master Agreement were not technically applicable to what is occurring in this transaction where the Parking Authority is issuing the bonds, and the City's role is just to advance funds in the event there are deficiencies in the Debt Service Reserve Fund. 34 12/2/98 FINANCE COMMITTEE - Bill 980782
Right. It puts the Parking Authority in the primary position now of being responsible for payment as opposed to the City. The City now in the secondary position, only making up deficiencies.
Whereas in the Master Agreement, we were the issuing authority; and who was responsible for deficiencies, the City also?
Yes. It was very difficult to incorporate the terms of Master Agreement into this sublease because this is not that kind of a deal. And, finally, after review of why the 1959 agreement could be abandoned in this case, the City Solicitor's office agreed that it was no 22 longer necessary that Council has the authority, without reference to a '59 Master Agreement, to authorize a lease. This lease runs -- this is a sublease 35 12/2/98 FINANCE COMMITTEE - Bill 980782 between the City and the Parking Authority for that subterranean garage at Independence Mall.
Does the Master Agreement also go away because there are no more outstanding bonds that have been issued by the City? And with the City making up deficiencies, are all bonds issued by the Parking Authority -- or issued on behalf of the Parking Authority actually issued by the Parking Authority at this point in time?
I don't know the answer to that. The Master Agreement does not go away, it still exists; it's just that this lease is not pursuant to that agreement anymore.
And the other changes I hope you have but I don't know if you have, there is a black-lined copy of the sublease that used to 36 12/2/98 FINANCE COMMITTEE - Bill 980782 be called "the appendix," which shows exactly what was changed from the copy that had been provided to you when the ordinance was initially introduced.
I'm sorry. I was distracted. Would you mind repeating that, please.
I have -- and I hope you have -- the City Solicitor's office, I thought, had forwarded to Council the black-lined copy that shows all of the changes that were made, the actual text of the changes that were made since Exhibit B was introduced to Council together with the ordinance in October.
We don't have that. I would assume that the chief clerk may have that.
Right. You actually have a copy of Exhibit B, but it's not black-lined.
Is this considered, then, the final version with the changes? Or is this the original appendix Exhibit B without the 37 12/2/98 FINANCE COMMITTEE - Bill 980782 changes? What is the document that we actually have?
The copy that you have in your hand, which is a clean copy, sir. The black-lined copy and the clean copy are one in the same except that the top one is a black-lined copy, and the one in your package is minus the black line.
All right, just so the record is clear, you're saying that we have a black-lined version, and the clean version we have is the cleaned-up version of the black-lined version that you're handing in?
Right. And it's been suggested that it would be helpful for you to know that what we're discussing here is an exhibit to the ordinance, not a portion of the body of the ordinance itself. And the copy which is on file 21 at the chief clerk's office is the final version. It's just -- should anyone be comparing from the original to the final, the black line will show you each change.
But are you, in 38 12/2/98 FINANCE COMMITTEE - Bill 980782 fact, also asking us this morning, based on these changes, that we need to amend the bill to --
The pink bill doesn't get amended other than the change in word "appendix" to "sublease."
So you're putting us on notice that there's a new Exhibit B, which is an appendix, which is an attachemtn to the ordinance.
And I understand you to say that the chief clerk's office has the amended copy?
I think, Miss Adams, you actually got called up, though, to respond to this item number 2, the basis for calculating parking charges was revised. We didn't go over that, did we?.
Well, someone just took my 39 12/2/98 FINANCE COMMITTEE - Bill 980782 black line but -- (Laughter.)
We can go back through all that discussion if you want to.
If I can borrow that back, thank you. There are a series of expenses basically which are -- which parking charges are required to be set at a level so they're sufficient to meet.
But, as background, the purpose for item 7 is to establish a base level of parking charges, a requirement that the Parking Authority set charges at a rate to cover certain expenses. And those expense categories were actually clarified to show that any gross receipts would also include income on investments, which wasn't necessarily clear. Debt service is reflected in a separate 40 12/2/98 FINANCE COMMITTEE - Bill 980782 category, item number 5. You can see the debt service had been reflected in item number 4, but had just been moved to its own category. These were changes made by the City Solicitor's office because they wanted to see the material set forth in just a different form. Direct operating expenses. It was made clear that that was to include trustee fees. There was added the requirement that the charges be sufficient to reimburse the Authority for monies in connection with improving the garages. Also in connection with alterations, additions, and other improvements, and to pay rent to the City. And then the rent due the City, rather than being subject to a formula in the Master Agreement, is now set forth in this agreement. And that appears in Section 8, where the actual calculation of the constant rate due the City is set forth. Previously, there were provisions in the Master Agreement which set forth a methodology for a rent determination between the Commissioner of Public Property and the Parking Authority. Since we no longer are referring to the Master 41 12/2/98 FINANCE COMMITTEE - Bill 980782 Agreement, there actually is set forth in this agreement the actual rent. And the rent that is set forth here is the existing computation of the rent the Parking Authority pays with respect to the Independence Mall garage to the City annually. So parking charges have to be sufficient to pay City rent.
Now, Parking Authority pays us rent because we, the City, technically own all of these garages?
All of them are quite different. In this case, the garage is constructed on a lease that the City has with the Commonwealth of Pennsylvania. And that's what your subleasing to the Parking Authority. And so in consideration of that sublease, the Parking Authority pays rent.
I'm sorry. I missed that part. Why do we have a lease with the Commonwealth?
Because the Commonealth 42 12/2/98 FINANCE COMMITTEE - Bill 980782 owns the ground or owned the ground. Technically right now, the Commonwealth owns the ground, has leased it to the City for Independence Mall.
Yeah, for that particular location, what do you pay the City? And do we pay anything to the Commonwealth since -- do they own the garage or do they own the ground?
On which we build a garage. 43 12/2/98 FINANCE COMMITTEE - Bill 980782
They actually built in the mid-'60s, and then they leased the built garage to the City, which the City is subleasing to the Parking Authority.
Well, now, I can't tell you what the actual amount is; I can tell you what the computation is.
Are you speaking specifically on the Independence Mall garage, Councilwoman?
Rent to the City on that 44 12/2/98 FINANCE COMMITTEE - Bill 980782 garage, in the last fiscal year, the Parking Authority fiscal year ended May 31, 1998, was $530,219.
One of the other questions is, we understand now what your rent is. What did the Parking Authority actually make out of that transaction? 'Cause I'm -- ours is -- I mean if the formula is -- what I'm reading here is the rent equals 0.75 times (0.85) times gross revenues, excluding parking taxes, minus operating expenses. So are there net revenues to the Parking Authority? 45 12/2/98 FINANCE COMMITTEE - Bill 980782
There were net revenues to the Parking Authority as well as the Independence Mall, Councilman. Those net revenues -- and I had to do a quick Matt, but those net revenues were approximately 955,000.
The net revenues to the Parking Authority plus your rent payments to the City equal the total gross revenue at the location, or is it --
Less your expenses. What were your expenses at the location? I assume your expenses are all --
Total expenses at that garage in the last fiscal year were almost $600,000.
All right. So we've got 500,000 coming to the City, 900,000 46 12/2/98 FINANCE COMMITTEE - Bill 980782 going to you, 600,000 in expenses. This is like a $2 million operation down there?
The total gross revenue at this facility last year was about 1.5, 1.6 million.
500,000 in rent coming right to the City, which comes out of the formula.
I apologize. I was reading the wrong line. The operating total gross revenues were $1.4 million. Operating expenses were roughly $556,000 dollars, payment to the City was $530,000.
My name is Vince Robb, 47 12/2/98 FINANCE COMMITTEE - Bill 980782 Controller for the Parking Authority.