Aye. The ayes are 15, the nays are 0. A majority of all Members having voted in the affirmative, the bill passes. The next bill to be called for consideration is Bill No. 030769. THE
An ordinance amending Section 19-1303 of the Philadelphia Code by extending the exemption period for certain existing grants of exemption, under certain terms and conditions.
This bill having been read on two different days, the question now is shall the bill pass finally. The Clerk will please call the roll. THE
This is Bill No. 030769. Can I have everyone's attention please. I know that our visitors were leaving and it was somewhat noisy. We are now considering Bill No. 030769. I would please ask the Chief Clerk to call the roll.
Madam Chair, could somebody tell me the details of the bill? Is this the bill that is going to extend the abatement privileges for the hotels that already have gone through the 10-year period?
Thank you, Madam President. This bill, so everyone understands, was a result of requests from hotel owners who have fallen into -- they were coming to the end of a three-year tax abatement. This Council had extended on, I think, October 27th of 2001 that extended the commercial tax abatement to 10 years. These particular properties were in the construction phase and did not qualify for the 10-year extension. As a result of some of the problems we've been having post-911 with our hospitality industry and especially considering some of the difficulties we've experienced with our Convention Center-- and hopefully has been shown to be making a come-back through the leadership of Councilman Nutter and Councilman DiCicco on the Board there, seem to be coming out of the woods and will hopefully be able to rebound our convention business over the next three to five years. in the bill was an extension of seven years of the three-year tax abatement to make it ten. We decided during the course of debate that because of the three to five year cycle to get us back into the convention business, back strongly in the convention, that we would scale back the abatement to five-year extension, making it a total of eight years as opposed to the ten. There is an economic cost associated with this. It is not money that the City is currently collecting so that it is not giving any money back. It was money that we had expected to collect, but this bill would request a forbearance of that until our hotel industry can get out of the problems that it's having. This bill does not affect every hotel. There are certain hotels in our City that have taken advantage of TIFs; they are not eligible. There are certain hotels that are much older, places like the Society Hill Sheraton and others that will not -- Double Tree, which will not qualify. But we have to hotels got a five-year tax abatement when they first came online. That expired. And every hotel is struggling, and we need to find ways of -- can somebody turn their cell phone off. It is really, really very annoying. Thank you. We are trying to work with them to find ways to help them in their situation also. The issue for me, however, is that in the last number of years, four of our hotels have converted to condominiums. We have lost the jobs associated with the hotel conversions. And more importantly or as importantly, we have lost the taxes that were being paid by that institution because they qualified for the 10-year tax abatement on conversion. So my concern in the 10 hotels that are involved in this, there are 1500 jobs associated with those hotels. Not all of them will close, not all of them will convert, but potential for them to do so is there. The people who are employed in the hotels do make They're not high-paid jobs, but they are jobs with full medical benefits. They're making 10 or $12 an hour. It's a nice environment to work. And many, many, many of these people came from Welfare to Work through training programs with the City of Philadelphia and the State. We have helped them transition from Welfare into the service industries that are a major component of our City's economy. This bill will take some money, unrealized money at least, away from the City, money they won't be able to collect, and it will affect the School District similarly. My concern is that if those hotels -- any of them, all of them, some of them -- convert to condominium or luxury apartments, we will lose the jobs and their wage taxes. We will also lose the real estate taxes because they will now -- if it's extensive conversion, will qualify for a full 10-year abatement. So the possibility is we're going to lose the real estate taxes and the jobs.
Now, Councilman Cohen raised some very important issues during the course of the debate. We did not have full auditing of these businesses. We expect -- and I think everyone will agree that the hotel industry in general in the City is suffering. I didn't think it was necessary to go through the process of a full audit of all of these hotels. I take people at their word when they tell us that they have some serious concerns about their economic condition. And I think all of the things surrounding it, 911, Convention Center, slacking off of convention business, I think we can all agree that most of our hotels are doing their best to struggle to stay afloat. Again, this is not affect and in some ways is not fair to the other hotels that have been in existence for a long time. If they received a TIF, there's nothing to abate because we already accelerated the abatement my doing the TIF. So I would ask Councilmembers to consider all the factors involved. I impact. We did try to scale it back to make the economic impact less than it would have been in the original bill. I am concerned about the 1500 jobs that are potentially in jeopardy. And I am concerned about the conversion of hotels to condos and apartments for two reasons: Number One, as I said before, we lose the taxes because they will qualify for a 10-year tax abatement; and Number Two, three to five years from now if we're back in this business strong, we might not have enough hotel rooms to accommodate the new convention business that we're trying to bring here through all our efforts. So I recognize it's a difficult decision. I recognize it's a complicated issue and have many factors associated with it. I would appreciate everyone's consideration in voting the bill. But I think it's important to bring the issue forward. And in next term, if this is not successful, try to find ways to help all of our hotels. So I thank you for our consideration.
Madam President, there's a list. One is the Hyatt on the Waterfront -- I'll read the list. It's the Ritz-Carlton, Hilton Garden Inn, Sheraton Rittenhouse, Raddison Warwick, Sofitel, Hampton Inn, Rittenhouse Square B&B, Inn on Locust, and the Hyatt Penns Landing. As it relates to the Hyatt Penns Landing, I can say the City was very much, through Penns Landing Corporation, urging the Hyatt to be built at that site with the promise or at least the hope of a promise that there would be a major development there; the Simon project, for example, that went away, that there would be a tram creating a critical mass where people can come and enjoy the waterfront. That hasn't happened yet, and we're working towards doing that. But we kind of, through Penns Landing and with the help of pension and with the help of the DRPA, kind of created the opportunity for that hotel to be built. And I'd hate to see that -- it's a prime site for condo conversion. And there's 265 jobs at that location alone. So again, this is -- and the reason that we had to do this quickly is we were advised legally that if there was a break in the abatement -- the abatement ends December 31st. If there's a break in the abatement, it would be impossible to extend it or at least much more difficult legally to extend it, and that's the reason why it was done in a short period of time at the end of our term. Any other questions, I'd be happy to answer.
Thank you. At this time the Chair recognizes Councilwoman Brown.
Thank you, Madam President. Let me first command the sponsor of this bill for what I believe to be a very Councilman Ortiz' questions on the details of the bill. I will speak to additional details of this bill which ultimately negatively impact the Philadelphia Public School System. Conservative figures for this bill estimate that the School District will lose approximately $2.3 million a year or close to 12 million over five years. A teacher's salary, benefits, and other supports cost the district about $80,000 a year. That's 29 teachers that will not be hired should we lose this money. $2.3 million dollars a year will buy textbooks for 25 of our area schools. And while this district is well underway in getting new textbooks, again, this is an area I believe should not be compromised. All of us know, understand, and agree that we need to be advocates for the hospitality industry. We know the tremendous added value impact that they have on this economy. Where I part ways is the impact on Philadelphia Public School System. And for that reason, I cannot be and will not be measure in the legislative body that will negatively impact the Philadelphia Public School System now and/or in the future. Therefore, I will be voting no on this bill.
The Chair recognize Councilman Kenney for a point of order.
I appreciate going out of order. And I do appreciate and respect the comments of my colleague. I know she's been a tireless advocate for the schools and I respect and appreciate her position. I just again want people to consider, we know what the numbers are and what they buy in textbooks and teachers, but I don't think we can calculate the impact on a family from a mom or dad losing their job. These children also go to school. I know the family is disrupted. And the taxes that we lose as a result of loss in wage tax and other taxes, sales tax from buying power and all those things should be factored in. But again, I think it's very important to any or all of these hotels convert -- and the potential is there because four have converted in the last few years. If any of them convert, we lose for 10 years all the real estate taxes on the improvements made. So that would short-change the School District and the City and we would, again, los3 those jobs. So I do appreciate Councilwoman Brown's position. I think it's a valid one. But I do think that other factors related to the loss of employment and the conversion of hotels to condos and apartments also impact the School District and the City. So I thank her for her consideration.
Thank you. The Chair recognizes Councilman Cohen.
Very good. The Chair recognizes Councilman Clarke.
Thank you, Madam President, having participated in the debate on the Hyatt in particular when I was a member of Penns Landing, I concur with the sponsor of the bill with respect to -- and I hate to say the dream that we sold to the developer that we would Penns Landing because at that time I think we all thought, having had the largest retailer not only in this area but in the United States targeting that particular portion of land for development, we anticipated that that would be done. And I'm sure had Mr. Keating not known that that deal ultimately would not be implemented, he probably would have opted out of that particular project. But the reality is, is that as a result of this particular piece of legislation, it will create a gap in the City's five-year plan, as does most of the things that we do, frankly speaking, as witnessed by the letter of the PICA Board, an organization of which I don't always agree with. But I think that this particular issue in a broader nature. I think that it is creating, to some degree, an unfair advantage for some of the hotels that are in this particular legislation. At a minimum, I think the perception is there by owners and developers of all the hotels throughout the City of Philadelphia. When I met with Mr. Keating and his representative to talk about this particular piece of legislation, I suggested that we continue discussion in the new Session of Council and more of a comprehensive approach, creating an environment and some incentives that might help all of the hotels, because I, frankly speaking, think all of the hotels as result of 911 and as a result of the Convention Center downturn are suffering. So I think it would, frankly speaking, be inappropriate at this time to pass a measure that would target only 10 hotels, particularly one which, frankly speaking, is the only call that I got, although four other hotels are in my district at this particular time. more than willing, as the Councilman suggested, in the next Session of Council if this bill is unsuccessful to work diligently to ensure that we have a healthy hotel atmosphere, realizing that a substantial amount of the workers in those particular hotels are in fact from my Council District having gone through various programs at the OIC. But at this particular time, I just think that it's probably not a good idea to do this at this time, given the uncertainties of the impact of this particular bill. Thank you, Madam President.
You're welcome. The Chair recognizes Councilman Cohen.
Thank you, Madam Chair. I wanted to support what Councilman Clarke said and say I respect Councilwoman Brown's point of view that she won't support anything that's going to reduce income for the schools, but I think there's a much broader understand why hotels should be put on a welfare program for five years. I've never heard of such a waist of funds. Nobody ever studied whether all these hotels were necessary in the first place. There was a lot of criticism at the City giving any financial support to any of these hotels because there was never a study made by a responsible group that indicated these hotels would be economical. We were in a wild building craze. And now that it's been proved that they should have had a study in the first place so they wouldn't have built all these hotels, now they're telling us this fanciful story that's going to take three to five years before they get to be self-paying and therefore we ought to support them during this period. What happened to the notion about developers wanting to make profits? " But now that they're afraid of money, now suddenly they want to become partners in the City and rob the taxpayers. That's what we're talking about. I don't understand Councilman Kenney's push for the hotels just to grant them this money. What happened to -- we always talk about, let them market decide. Well, the market is deciding. If these hotels can't stand it, they ought to get out of business. They should probably never have been built in the first place. And to talk about saving the workers' jobs, you know, I can't believe that any Councilmember would believe that hotels would keep people on the payroll if they weren't needed. All the hotels are going to do is to grab that money and use it the way they want to. It's going to have nothing to do with labor. When I asked the witness the question, he admitted that, of course, hotels only employ people when needed. Either the people are needed, and if they're needed, then there's going to be money to support them, not taxpayers but money from the customers. If they're not needed, the hotel is not going to employ them. I don't understand this view that hotels, composed of mostly investors who are very rich who want to get richer but who never want to take a risk. All they want to do is to have taxpayers take the risk. It would be wasteful spending. I think this bill ought to be defeated. You know what's going to happen if we pass this bill? Every hotel in town is going to find a way. Just think of what the attorney said in support of this bill. " Councilman Kenney admitted they're going to make those claims. We know they're going to do it because business have to in the business of making money. If they can't make it from customers, they're going to make it from the taxpayer. But when it comes to sharing, they don't want to share their money. None of them ever agree to pay the City a share of the properties if they make the profits, and none of them spent the time making studies as to whether a hotel was built. I don't share any view that the developer did us, the City, any favor. I've never known of a developer who did something because the City wanted it done. The developers do it because they have to do it to protect their investors as best they can. They do it because they expect to make money. And they like the City to encourage it because they have the reason to come back and ask for money at the beginning and then later on. You know, if we have free enterprise, let's practice free enterprise or let's develop a partnership in which the City shares profits and let's do things in a thinking way, let's not go on a mad orgy to build hotels.
But this notion of they're going to be able to take care of themselves years from now, well, let them do that. I never heard of giving money away to these hotels. I just don't understand that kind of philosophy. I'm urging everybody, vote no on this bill. We're told money is so tight that we worry about every expenditure now. Yet we're talking about giving millions away to these hotels and the other hotels that are follow in their request. They'll all have a case of fairness. That's what law firms are for, to spell out why it's unfair that their client hasn't yet been made rich by the City and why they ought to be made rich now because you made others rich, and there will be no end. So I'm urging everybody to vote no and let's restore some fiscal sanity to our decision in Council. We're doing very well today in City on issues affecting the people of Philadelphia. Let's not spoil it by just indicating that we're ready to just dispose of money, taxpayers money in a wild and unsynchronized and unthinking way. So I urge no on this bill. I would prefer if the bill were withdrawn because it has no reason to exist.
Thank you, Councilman. At this point, the Chair recognizes Councilman Nutter.
Thank you, Madam President. Madam President, I agree with many of the comments made by, I think, just about every Member who has spoken, and there have been comments on both sides of this issue. I am a cosponsor of this particular bill, although naturally Councilman Kenney has taken the leadership role on it. And I think my colleagues know me well enough to know that with virtual certainty, usually when I say I'm going to do something, I do it and I commit to it. Sometimes that's been good and sometimes maybe it's not been so good, but I do think it's important. I do have a couple perspectives on this matter, and they've been raised by a already. We've had a lot of discussion, certainly intense discussion, over the past year or so about taxes and tax policy here in the City. Whether it was the wage tax, property taxes, creation of the Tax Reform Commission, and a variety of other matters. We are constantly -- I think Members are constantly, legitimately searching for some answers about how we improve the business climate here in Philadelphia. I have the fullest confidence that next year we'll spend a significant amount of time hopefully working on a very sound tax policy for the City, utilizing much of the good work of the Tax Reform Commission that was created by the voters. The hotel and hospitality industry obviously is struggling to some extent. I don't, quite honestly, as I add it all up, I don't necessarily think that ultimately this matter is going to end in a positive situation, but I did make a commitment about it and I think the larger commitment should be to working with our entire hospitality of the hotels in Philadelphia to better understand what their circumstance and situation is. On the one hand, there's information around that the occupancy rate many of the hotels is about 66 percent, which is the same rate that it was last year. One of the major differences, though, in their pocket is the fact that the average room rate is lower this year than it was last year. So I think if we can more comprehensively work to address the hotel and hospitality industry issues, I'm certainly prepared to do that and have a significant amount of vested interest in that. At the same time, I am going to keep the commitment to my colleague and vote in support of the bill. But I think we will be revisiting this particular issue related to hotels, I am sure, next year. So with that, thank you, Madam President. I appreciate the opportunity.
Thank you. The Chair recognizes Councilman Kenney.
Thank you, Madam President. Just quickly, in the spirit of the holiday, I don't want to belabor this. And I admire Councilman Cohen's ability to argue laissez-faire capitalism in one instance and Roosevelt socialism in another, and I admire his abilities and skills. But let me finalize what the whole motivation was. There's three major areas. And Councilman Cohen may disagree with me, and that's fine. I am concerned about the jobs. There is no guarantee that people are going to continue to be employed, but I think this bill can give people some breathing room, give the business some breathing room, and maybe keep the people employed for a period of time until we recover in this industry. The second one for me is probably most important, and that is we have had four conversions of hotels to condominiums. The conversions of hotels to condominiums create a 10-year tax abatement where we lose the real taxes anyway. If any or all of these hotel convert, Councilwoman Brown's concerns will be the School District and the City won't be getting real estate taxes for 10 years, the people who are employed there as hotel service people will no longer be employed so the wage taxes that they pay will no longer be available, the business taxes associated with the hotel will go away. Now, those are my motivations. I recognize the unfairness because it doesn't affect all the hotels, but this is a window of opportunity where we did not have a break in the abatement where it expires, as I said, December 31st. And if we will try to do it next year and we have to look at some other ways and help the hotel industry next year, too, we're going to do that too. This was an effort to try to give these places some breathing room. My motivations were the employees, the potential loss of real estate tax revenue upon a conversion. So I appreciate everyone's consideration. If we'd like to call the vote up or down, I think, it's appropriate. Thank you
Thank you. This bill having been read on two different days, the question now is shall the bill pass finally. I would ask the Clerk to please call the roll. THE
Aye. The ayes are 10, the nays are 5. A majority of all Members having voted in the affirmative, the bill passes. The next bill being called for No. 030825. THE
An ordinance authorizing the Philadelphia Authority for Industrial Development to file an application with the Office of the Budget in aggregate amount not to exceed 15,350,000, all under certain terms and conditions.
This bill having been read on two different days, the question now is shall the bill pass finally. The Clerk will please call the roll. THE
Aye. The ayes are 15, the nays are 0. A majority of all Members having voted in the affirmative, the bill passes. The next bill to be called for consideration is Bill No. 030826. THE
An ordinance authorizing the City of Philadelphia in corporation with the Philadelphia Authority for Industrial Development to undertake a project to promote the health, safety, and welfare of the residents of the City of Philadelphia, all under certain terms and conditions.
This bill having been read on two different days, the question now is shall the bill pass finally. The Clerk will please call the roll. THE
Aye. The ayes are 15, the nays are 0. A majority of all Members having voted in the affirmative, the bill passes. The next bill to be called for consideration is Bill No. 030742. THE
An ordinance authorizing the Commissioner of Fairmount Park and the Commissioner of Public Property on behalf of the City of Philadelphia to transfer two certain slots or pieces of ground situate in the vicinity of McNulty and Townsend Roads, all under certain terms and conditions.
This bill having been read on two different days, the question now is shall the bill pass finally? The Clerk will please call the roll.
Aye. The ayes are 15, the nays are 0. A majority of all Members having voted in the affirmative, the bill passes. The next bill to be called for consideration is Bill No. 030743. THE
An ordinance amending Bill No. 990728, approved December 6, 1999, by extending the time for compliance with conditions until December 31, 2004.
This bill on two different days, the question now is shall the bill pass finally. The Clerk will please call the roll. THE