And then you would continue your hearing so that we go back to our hearing? Councilman Clarke.
Point of information, Madam President. Madam President, I have to think that the campaign finance bills, that particular hearing will be at least as lively as this one, if not more so. To suggest somehow there was going to be 55 11/19/03 - WHOLE - BILL 030663 limited discussion on two bills, looking at the press box over there, I anticipate that there will be a substantial amount of discussion. I understand that my good friends in the press box love culture, but I have to think that some of their interest lies within the campaign finance bills. So frankly speaking, I don't think that that particular hearing could be done in or minutes. 11
I would 12 agree. 13 I think we ought to go on, please. 14 Councilman Nutter, do you mind if we 15 recognize some Councilmembers on the first 16 go-around and then we can come back to you if 17 you have other questions? 18
Madam President, 19 I would never mind that; you know that. But 20 if you would let me ask one question, I'll go away for a while.
Well, Madam 56 11/19/03 - WHOLE - BILL 030663 President, that was a political promise. (Laughter.)
Subject to change at any time. The question is, we're having a money discussion which, you know, at the end of day I always like having a money discussion. Not that I have any, but I do love money. Your partner is Clear Channel; is that my understanding?
The issue here is how do we save the building and have another use? And you could generally ask the question why does it have to be a theater, but I'll torture you with that later. Clear Channel in a press release from their website on November 4th today reports results from its third quarter and its September 30, 2003. The company's reported revenues of $2.5 billion for the third quarter increased 9 percent over 2002 revenues of 2.3 billion. 57 11/19/03 - WHOLE - BILL 030663 They're obviously in for a fair amount already. And I don't mean to spend other people's money, but we're here trying to deal with the public's money. So I guess what I don't understand is if they're already at 7 and given the size, apparently, of this 8 company and they believe in the project so 9 deeply they have a variety of 10 entertainment-related talent that they, I 11 guess, utilize and place in the facilities that they run and operate, why don't they fill the gap? Why is the government being asked to fill this gap? I mean, we should be borrowing money from them. Their revenues outstrip ours about four times.
Councilman Nutter, if you would not mind, I'd like to defer David Anderson who is here from Clear Channel who could answer that question himself.
I think the young lady gets the award for the smoothest handoff I ever seen in the Olympics. It was very smooth.
Is Mr. Anderson 58 11/19/03 - WHOLE - BILL 030663 in the room?
I am that Mr. Anderson. My name is David Anderson and I am the President of the Theater Management Division of Clear Channel Entertainment. I did not bring my checkbook, I'm afraid to tell you. We are a very eager investor in public assembly facilities around the country. From the theatrical standpoint, we currently operate and we are in the development 16 process construction of two other major projects, one in Baltimore and one in Boston. We do contribute significant amounts of our own capital to those projects. But invariably, the cost of the construction, the renovation, the restoration, whatever level of new theaters is going to result in far outstrips the ability of a commercial developer or commercial operator to justify it as an investment. We are a public company. 59 11/19/03 - WHOLE - BILL 030663 We have an obligation to our shareholders. I hope many of you are shareholders.
You listen to the radio stations, though, so you're customers of Clear Channel and we're all grateful. There is a very practical criterion for return on investment. And an $11 million investment by Clear Channel is a very significant commitment on our part to the Philadelphia market and to the development of this particular project. We're proud of our ability to write that kind of a check, but there is a point beyond which the economics of a theater project are more expensive than what the return that a commercial company like Clear Channel can, in fact, justify. The theater in Baltimore, the project in Baltimore that is actually set to open in February, it's been almost five years in development now. Really, when you go through the process from the very beginning, it's almost 10 years in development. It's 60 11/19/03 - WHOLE - BILL 030663 about a $65 million project. Clear Channel has invested almost $10 million of that 65. The balance is coming from state, county, city and local not-for-profit investment as well as federal historic tax credits. It is a public private partnership in the truest sense. The market in Baltimore, we expect to sustain the investment that Clear Channel is putting into that project. Likewise, in Philadelphia, the public private partnership is an integral part of the financing plan. And without the commitment from the public sector to go along side of the investment that Clear Channel is making, not only in up-front money, but assurances that there is never going to be a request for subsidy for operating expenses as we move on down the road, those commitments by Clear Channel in combination with the public sector, the State and the City, I think are a winning project for all of us.
Okay. You'll be able to answer some other questions. Thank you, Madam President. 61 11/19/03 - WHOLE - BILL 030663
You're welcome. The Chair recognizes Councilwoman Brown.
Thank you, Madam President. Mr. Cuorato, good afternoon. My question is actually a follow-up to Councilman Nutter's question regarding our School District because I don't think I heard an answer. And if we would replay this afternoon, you mentioned that you disputed a number of assertions in Mr. Saidel's letter. If we look to Paragraph No. 3 which says, "Despite this increase in local public money requested in the Project Plan and decline in tax revenue, that will accrue to the School District and the City," can you state for the record what the impact of this transaction will have on the School District? I don't recall hearing an answer to that.
Please identify yourself for the record. 62 11/19/03 - WHOLE - BILL 030663
My name is Sam Rhoads. The change to which the Controller is referring to in the November 19th letter does not impact -- there is no change to the impact to the benefit to the School District of the change. In terms of your underlying question, what is the benefit to the School District, we project that the School District will net $4.2 million over years as a 12 result of this project and that that 13 represents a net gain over what they would 14 otherwise get of 2.8 million net new dollars 15 to the School District. 16
You're 17 referring to of your testimony, 18 correct? 19
Now, you mentioned this new phenomena called TIFing. If that happens, will that have an additional negative or positive impact on the anticipated revenues to the School District? 63 11/19/03 - WHOLE - BILL 030663 You mentioned TIFing of amusement taxes, which is a new phenomena since I've been here. So will there be any impact on the School District should that come to pass?
Could this possibly increase the revenues to the School District should the State approve this?
No portion of the amusement tax goes to the School District.
You're welcome. The Chair recognizes Councilwoman Tasco.
Good afternoon. of the Project Plan, just for the record, I'd like for you walk me through and explain to me the tax revenues. Where it says, "Real estate taxes assume a base market value for real estate tax assessment..." blah, blah, blah, and you have a base line. All of 64 11/19/03 - WHOLE - BILL 030663 the real estate will -- explain that to me. Explain the bottom of of the Project Plan.
All we're trying to establish is that currently the market value of the district for tax purposes is two and a half million dollars. We expect that after the substantial investment in renovation and expansion of the building that the market value of that project will be $13.8 million. So all we're doing is describing the increase to the market value of that project as a result of the investment.
And the two million would still go to the School District?
That's correct. The base value of that, the taxes associated with that two and a half million dollars would continue to be split as they are today between the School District and the City General Fund. The City General Fund plus or minus 45 percent of the real estate tax, and the School District gets plus or minus 55 percent.
I guess my 65 11/19/03 - WHOLE - BILL 030663 question is, as a result of the project, there will be no increase to the School District?
Not from real estate taxes. The increase to the School District will come from use and occupancy taxes, which there are currently no use and occupancy taxes paid on the project. So what Council is being asked to approve here is a pledge of 50 percent of the use and occupancy taxes towards this project so the School District will get the other 50 percent. Those are net new revenues to them. In addition, liquor will be sold in the theater and what's called liquor by the drink tax is pledged to the School District and they will get those net new revenues. So those net new revenues in addition to continuing to collect what they collect today from the vacant building adds up to the $4.2 million.
Okay. So if the building were -- I thought it was a historic building, but I understand that it can now be demolished?
It is currently not 66 11/19/03 - WHOLE - BILL 030663 locally designated, so it could be demolished, yes.
If we don't have anything there, we don't get anything, right?
So after 12 years, all of the taxes and all of the sales 13 tax and all the taxes that you would dedicate 14 to the TIF loan would go to the School 15 District or go to the City. 16
That would be right. 17 When the TIF District terminates, all of it 18 would go to the General Fund, into the School 19 District, or sooner should the TIF note burn 20 off early, which is possible.
Now, what happens -- I know there are a number of partners in this project. What happens if they decide to pull out of this deal? Who is held responsible for the TIF repayment? Does 67 11/19/03 - WHOLE - BILL 030663 it follow the -- is the TIF the building or the TIF the developer. Who pays if something happens to this developer?
Ultimately, the responsibility would go to the owner of the building.
So when you negotiate a sale, all the responsibility and obligation is transferred to the new owner?
Is there any point where we're ever left holding the bag?
I note we have gotten some letters of concern about the competition of the venue. Would you not be concerned about competition also? Are all of our theaters in the area thriving to the point that we need another production facility?
Those concerns have been expressed to the Goldenberg Group, and 68 11/19/03 - WHOLE - BILL 030663 that is one of the reasons why we had Econsult Corporation do an impact study in reference to this project and how it would affect existing theaters. Based upon the findings of that report, as well as actual conversations with other operators, we feel as if this will not negatively impact on existing theaters, that the existing demand can support it and that it will actually enhance and help the performing arts community to grow and will also help the City to continue its actual initiative to become a destination City. There are people here that are willing and able to testify on how these type distinct venues, these historical theaters after being renovated and restored have served dynamic impacts and effects on existing performing arts communities as well as the economic revitalization and development in the areas in which they sit.
And one last question for me. Would you maintain the decor? I believe it's the art deco that is so 69 11/19/03 - WHOLE - BILL 030663 passionately felt by the supporters?
If we didn't, I think Howard Hass would personally slay me. (Laughter.)
But, yes, part of our funding is actually historical tax credits, and there are certain standards that we have to withhold that are set by the Department of Interiors and the National Park Service. And based on those standards, we have to do a certain level of restoration to be able to achieve that funding. So it is our absolute goal to be able to do a full restoration and renovation and maintain all of the art deco glory that originally existed in the theater. We have a dynamic team of people that have come down and are ready to work on this project, esteemed people like Evergreen Studios that does conservation and restoration projects across the nation in regards to paint restoration. We have architects that are well versed on this type of restoration projects. And Keiss, Strong, Colidner (ph), which is actually the original architects that prepared 70 11/19/03 - WHOLE - BILL 030663 the application for the Federal Historic Tax District is preparing our application for those tax credits. So, yes, it is absolutely our goal and objective.
Just as an aside, I had my first date with my first husband at that theater years ago. (Laughter.)
Thank you, Madam President. I have a question for Mr. Cuorato. I believe I understand it's a very basic issue, but I think for the record it's important. The TIF itself and the use change, if any use change would occur, the TIF is basically canceled; is that correct? Could you just for the record state if, in fact, the TIF is implemented, what exactly would happen if the developer would 71 11/19/03 - WHOLE - BILL 030663 decide to shift gears and do something different than the TIF would authorize?
Councilman, just so I understand your question, it's if the developer changes the use of the property?
Let's say the TIF is granted. Three or four months from now the project doesn't become exactly what we had in mind here. What happens to the TIF?
Councilman, the TIF agreement specifies the use so that will be agreed to up front by the City and the developer, so no change would be permitted.
In other words, it's a black-and-white issue? In other words, if it deviates even a little bit from what is presented, it is --
You're welcome. The Chair recognizes Councilman 72 11/19/03 - WHOLE - BILL 030663 Clarke.
Thank you, Madam President. Good afternoon. I just wanted to follow-up on a question by Councilwoman Tasco with respect to this particular venue, the need to have additional venues. Can you briefly go through some of the other comparable municipalities and the number of like type of theaters or operations that they have? Obviously, we know what's going on in New York, but some of the other municipalities that you wouldn't ordinarily think that there were these types of venues. Can you just briefly run through those? Tell us where we are as a City.
I would like to be very -- I don't know what Councilman Nutter said, but I'd like to pass this off also. We have people here that are much more well versed in that than I think either myself or Mr. Cuorato. So I would like to recognize, if I can, Craig Morrison or Adrian Fine from the National Trust who I think can speak to that. 73 11/19/03 - WHOLE - BILL 030663
Just so we understand your question, because I think Leslie and I may have had a different understanding. Were you talking about situations in other cities where renovations such as this --
No, no. 8 Existing venues. Some of the residents and actually some of the constituents that I represent had some concerns about another theater coming in and the competitive nature of that theater. And I would just like to get a sense of other municipalities, how many they have, where Philadelphia ranks within those top ten municipalities.
I understand. Councilman, I just respectfully will just modify Leslie's comment. I think that David Anderson from Clear Channel is best able to answer that, because they have experience in so many other cities.
Mr. Anderson, again, I would ask you to identify 74 11/19/03 - WHOLE - BILL 030663 yourself, please.
My name is David Anderson and I am with Clear Channel's Theater Management Division. I just did a little bit of quick comparison again. We run theaters in cities. We have theaters. Several of 8 them are in major cities like Philadelphia 9 with a significant number of competitive 10 venues. 11 For example, in the City of Boston 12 there are currently five theaters that -- 13 there's lots of different ways to categorize 14 them, but for the purpose of this comparison, 15 I'm talking about theaters that are capable of 16 hosting touring Broadway attractions. So this doesn't count a theater that is a local theater, resident company. It doesn't count a venue that is exclusively a symphony hall, but a theater that's a multi-purpose venue that is capable of hosting touring Broadway. The City of Boston currently has five such venues. And when the Opera House opens in July of this coming year, it will have six. 75 11/19/03 - WHOLE - BILL 030663 In Cleveland, with Playhouse Square Foundation and two other theaters that surround Playhouse Square, there are six venues that are capable and actively do present touring Broadway as well as a wide range of performing arts attractions. In Minneapolis, St Paul, which is a far smaller market than Philadelphia, there are five venues that host touring Broadway, dance, and local and regional performing arts. The City of Houston has four, including one that they just opened about a year and a half ago after having spent $90 million, and they are already at the point where there are not enough venues, there are not enough dates and they're looking to how they're going to solve that problem as they move forward. Dallas, Fort Worth, the regional market has five theaters. Washington D.C. has seven venues that are in the same comparable category of multipurpose performing arts venues capable of hosting touring attractions. 76 11/19/03 - WHOLE - BILL 030663 And the City of Chicago has and eight. Philadelphia has currently three that fall into the same category. Again, if you start adding smaller theaters or specifically symphony theaters -- that doesn't count the Kimmel Center, for example. But it has three that are in this same category.
Way, way below what you would expect a market of this size to be able to tolerate and to be able to encourage.
Thank you, Madam Chair. Just a point of information. Are all those venues public/private partnerships?
No, certainly not. Not all of them. Many of them are. Chicago, for example --
What percentage of them are public/private partnerships? Because you're here asking for the use of 77 11/19/03 - WHOLE - BILL 030663 public tax dollars, so I'm not sure how relevant it is particularly if you're saying we're nowhere near the saturation point in terms of the market. Wouldn't the market definitely be able to support this in terms of public/private financing then?
Well, the City of Houston who just developed the new Hobby Center currently sustains its existing performing arts facilities with a subsidy of almost $3 million a year. So --
I'm talking about in terms of development of the sites.
The City was a partner in the development of the Hobby Center along with the local not-for-profits
Out of all of the different venues you named, you can't tell me how many of them are public/private partnerships?
I could, given some time. I can't tell you off the top of my head.
Can you tell me 78 11/19/03 - WHOLE - BILL 030663 of your knowledge of those venues how many sought out philanthropic support before they came for public tax dollars?
My most recent experience in Baltimore, it was all done simultaneously, the state, the city, the philanthropic community, and the for-profit community all came together.
How many of them determined the level of local public subsidy even before they sought out philanthropic support?
Oh, I think most of them do that. The philanthropic support typically comes at the end because the private developer --
Well, according to Mr. Rhoads, the TIF financing comes at the end, the TIF mechanism comes at the end.
When you're looking 79 11/19/03 - WHOLE - BILL 030663 to raise private funds, when you're going to wealthy foundations or corporations or private individuals, they typically want to know that the money that they're putting there is going to be -- it's part of the project that's going to happen.
This project is already going to be supported potentially by HUD 108 dollars, potentially by state dollars. Before there would be the use of Tax Increment Financing, wouldn't you seek out philanthropic support first? In the end, I'm really trying to figure why this is a public/private partnership and does it have to be a public/private partnership?
My experience around the country in doing this is that very few ever work without significant public sector support.
See, you can't have it both ways. You can't say that the market in Philadelphia, the greater Philadelphia region is nowhere near saturated 80 11/19/03 - WHOLE - BILL 030663 and then at the same time say that you're at the point where you need public support this early. You can't have it both ways.
What I can tell you is that performing arts in general is not like professional sports.
So you were essentially asked for your portion of the money, not necessarily asked on how the deal should be structured?
My business is performing arts venues, it is saving, restoring, redeveloping and operating multipurpose performing arts theaters. Of the 16 that operate, 14 are historic movie palaces that have been reclaimed. It is a very important part of our past. 81 11/19/03 - WHOLE - BILL 030663
You would agree then if the answer to the question of why not knock it down is for the preservation of a cultural site that if we sought out philanthropic support early on, we might be able to answer Councilman Nutter's question of how much money the School District would have over the next years. 10
I think it's not a 11 fair question. I can't tell you what the 12 not-for-profit philanthropic support for such 13 a project would be. I don't know -- 14
Yet you can say 15 that we should be taking money away from 16 school children over the next 20 years or else 17 the project won't happen. 18
Mr. Anderson, that's your name, right? 82 11/19/03 - WHOLE - BILL 030663
I run the Theater Management Division of Clear Channel Theatrical.
And Councilman Nutter said that in the quarter you had earnings of $2.5 billion?
Because I keep hearing the word philanthropic here, and 83 11/19/03 - WHOLE - BILL 030663 you're not a philanthropic institution, are you?
We are making an investment, a capital investment in a business venture.
And what are your projected profits over the extent of the deal?
I'm not in a position to go into detail on that, but I can tell you that we have a very strict criterion for return on investment. And we're making an $11 million investment in this project.
So what is that criteria? Can you let us know what -- because, obviously, within that criteria, you have to have some understanding or some idea of how much return you're going to get on that and the stockholders are going to get on that $11 million; is that not so?
So can you give us an idea of when you sit down and you say, you know, this is project here that we can get the State to give so much, the City to give so much, and we can and the stockholders in the company can come away or the project of the year with so much profit? You must have that.
It's because it's taxpayers' money. You see, capitalism is fantastic when you can use the City's and taxpayers' money to make the profits. It's good and I'm not against it. But I just want to know -- what does it have to do? It has to do that City taxpayers, the School Board, the state monies and so on are all coming out of the citizens of Philadelphia and Pennsylvania. The word philanthropic is getting thrown around as if this is a philanthropic thing that you guys are doing. And I just want to 85 11/19/03 - WHOLE - BILL 030663 know -- and I want to see it. I want to see before a vote is taken on this what your projections are and how you came -- that criteria you say that you have before you make an investment of this sort. Because we're all here for historical preservation and we don't want that theater to be torn down. But we've also got to see how much of the city taxpayers' or state taxpayers' money is also involved in it and what the return of investment is going to be from this side of the ledger. So I want to know what your criteria is and what your projections are. And if you don't have them now, you can get them to us.
If I may interject. The final conclusion in regard to that is based upon the criterion that they've established as a corporate company. We have come to a negotiated agreement as to what, based on their projections, they can commit to this project. In addition -- and I know that 86 11/19/03 - WHOLE - BILL 030663 $11 million is a number that everyone has in their mind -- they have also committed to purchasing the federal tax credits. They have also committed to covering any cost overruns that we might incur.
Excuse me. They're committed to purchasing federal tax credits? I don't understand that. You purchase, you go to the federal government, you say, "I want to buy so many tax credits"?
No. In this particular project, we qualify for federal tax credits because --
So the federal government gives you federal tax credits that you don't pay taxes to the federal government on your investment. So it's again the government and the taxpayers giving you more on investment than your overall investment.
But, you see, you've got to use language correctly. You don't purchase federal tax credits. 87 11/19/03 - WHOLE - BILL 030663
They will be, and in essence it is a purchase transaction of tax credits.
The federal government gives you some tax credits for an investment that you're going to make in a certain urban area.
That would be the tax deduction. But tax credits are structured a little bit differently.
We know what tax credits are. We pass bills here to give people to come in to get tax credits for creating jobs in different neighborhoods.
In this particular instance, we could sell those tax credits to another entity. But Clear Channel is committed to putting in that additional to do that.
Excuse me. Excuse me, please. I believe Councilman Clarke is asking for a point of information.
Thank you, Madam President. Madam President, I just wanted to 88 11/19/03 - WHOLE - BILL 030663 get back into my questioning before I forget what the second question was going to be.
Before you get back into your questioning, as long as Mr. Anderson is at the table, I'm just rather curious, and I know it won't take him more than two seconds to respond to my question. You said in Philadelphia we have only three theaters that would be comparable to what the other cities presently have?
I've included the Merriam, the Forrest, and the Academy of Music.
The Kimmel Center doesn't host touring Broadway. It is a concert hall. It's a beautiful facility, but it's a symphony hall.
The Walnut 89 11/19/03 - WHOLE - BILL 030663 Theater?
Is smaller than the level that I drew the line at. If you're going to include theaters like the Walnut Street Theater, there are many more theaters like that in Boston and in Chicago and in other markets as well. I tried to draw the line at -- I think I probably used the 1500 seat up to 4,000 seats, which includes things like the Wang Center in Boston, the Colonial Theater in Boston. In Chicago, it's the Area Crown and the Opera House and the Auditorium Theater. We tried to come up with --
Thank you. I was just curious of the three that you were referring to. Thank you. The Chair recognizes Councilman Clarke.
Thank you, Madam President. A couple of brief questions. One, I wanted to go over the chronological order of the discussion with the City Controller, and subsequent to that, the issuance of this most 90 11/19/03 - WHOLE - BILL 030663 recent letter as of today.
In terms of when we circulated the Project Plan and the ordinances introduced, we also circulated to the Office of the Controller for their review, as well as to the Finance Director and the Revenue Department of the City of Philadelphia. So we provided it to them and arranged for -- give them some time to review it and set up subsequent meetings to discuss any questions or concerns they had. So that's all unfolded over the last 30 days.
Yes, I believe we spoke with them towards the end of last week.
Was that prior to or subsequent to any change in the Project Plan, the most recent change in the Project Plan?
The final changes to the Project Plan were made on and circulated to City Council and the School District on Monday, so it was prior to that. 91 11/19/03 - WHOLE - BILL 030663
One last issue. With respect to the community component about the decision-making process as it relates to the use of this particular site -- and I'll probably need Ms. Smallwood. I just wanted to briefly talk about my knowledge of the community component and the determination as to the ultimate use of the site. I recall, I believe it was in 1998, there was an earlier proposal as a supermarket. What exact was it, it was a supermarket and there was rather lengthy discussions about that with community and then there were other ideas that were raised and there were lengthy discussions with the community. And ultimately at the time of this request for demolition permit, there were lengthy and somewhat boisterous discussions with the community about that proposal. Can you just kind of walk me through the people that you talked to, the level of 92 11/19/03 - WHOLE - BILL 030663 outreach to residents and how you came to the conclusion, other than the financial aspect of the project, but in terms of the use and what the particular community of interest -- not necessarily just in that particular area, but because of the preservationists' interest and other entities, can you just kind of briefly tell me about that?
Yes. May of 2002 when Regal Entertainment decided to close the doors, there was a significant public outcry in regards to saving this theater. And Howard Hass actually was leading the way in starting the Save the Sam Eric non-profit organization with its mission to make sure that this building continue standing and that it would be restored and renovated and used some type of multi-entertainment purpose. I have made great strides to keep in the loop Howard Hass and we have kept the lines of communication very open and he is very connected with the historic community as well as the community in which he lives. He lives in Center City, and he has given me his 93 11/19/03 - WHOLE - BILL 030663 basic stamp of approval as to this project. He is here today, and I would like, if I can, defer to him for a moment so that he can speak better to that.
We have a list of witnesses, and Mr. Hass will be called at the appropriate time. Thank you.
But we have made efforts to make sure that we have reached out to the community. I've made presentations to the William Penn House. I've made presentations to the performing arts community. I've made presentations to their Board. I have also met with the Cultural Alliance. We have made a concerted effort to try to involve everyone in the community, especially the preservation community to make sure that we are doing exactly what the public was asking of us and what we promised the public. And that's what brings us here today. But in order to accomplish that, it takes a public/private partnership, not only in this theater, but this is how it's been 94 11/19/03 - WHOLE - BILL 030663 constructed in theaters nationwide. And it really does take that partnership to make this actually happen.
You're welcome. The Chair recognizes Councilman Cohen.
Thank you, Madam President. I was going to remark in response to the young woman's fine statements that the trouble is the public's pockets usually get picked. For example, with this advantage of a long life is you see things turn around. It used to be when I first came into Council we worried about the public purse, and government always took the position that we're not going to commit any money until business really shows it's committing the money. Now it's the other way around. From Mr. Anderson I learned that a public corporation consisting of private monies is not ready to make an 95 11/19/03 - WHOLE - BILL 030663 investment unless it's sure public money is going to be there. So public money now has become the means of prospecting, the means of investing. If you're going to run a risk, take it with public money, not private money, as the Daily News indicated today about Disney Quest. I remember all the funny costumes that Governor then Mayor Rendell wore in support of Disney Quest. He would come in City Hall dressed in all funny man's clothing to advertise Disney Quest. Today, I learn what appears to be, at least part of the cost, the City is hooked for 44 million. There's no 16 indication that Disney Quest has been hooked for anything. And I don't even know whether that 44 million includes the cost of the beautiful underground garage that can handle some hundreds of cars at Eighth and Market which has now been covered over because there is no Disney Quest. And Disney just felt -- and I guess the business has to survive -- felt it didn't have enough support or for some reason its interest was elsewhere. 96 11/19/03 - WHOLE - BILL 030663 I think that's a wrong twist. I think public money, tax money, is sacred money and it ought to go back to the way it was. " But business seems to move in the other direction these days. It doesn't want to take any chances but it wants to get the same kind of profits it would get if it took chances. And I don't think that's the way it ought to be. I think this development ought to go forward only if business is committed to it fully. And then if a little help is needed, then maybe there's room for some public help. But to build a structure and a proposal like this with about one third of the money, probably before it's done, probably half the money coming from public sources, and I suspect its half already, isn't it, with the State as well as the City? We're only being asked about City money. " And that's the wrong way to go. We have a lot of problems with your proposal because a TIF is presented to us basically as a loan to be repaid over 7 years; is that not so? 8 And it's weighted heavily on the 9 repayment coming from gross receipts and other 10 forms of taxes. We have a Tax Reform 11 Commission. I happen generally to disagree 12 with it, but in any point of view, the 13 business privilege tax and the gross receipts 14 tax are under serious question. The Tax 15 Reform Commission and I think the Mayor of the 16 City has spoken out on the need of repeal for 17 those taxes. 18 So I think, first, we're not talking 19 about a loan at all; we're talking about a 20 gift. And that gift will go to a lost investment if Clear Sound or the Goldenberg Group at any time decides it's not in their best interest. Therefore, I'm going to vote in opposition to this proposal because I don't 98 11/19/03 - WHOLE - BILL 030663 think it's at all in the public interest. Sure, I think the Sam Eric ought to be saved. It is a historic treasure. We've had some before; we've lost them. The City has survived. Maybe not as well as it would have survived if they continued it. " It seems to me that we need a proposal here that concentrates on paying for itself, the way business presents most proposals when it doesn't involve government contribution.
And that's the reason I think that having seen what happened with Disney Quest and all the excitement that it caused in Philadelphia at the thought of having a Disney Quest focus right here in Center City -- it still seems to me to be a wonderful idea, but for some reason Disney Quest thought it was not as attractive as any other City. The only thing I can object to -- and I address this to you, Mr. Anderson. I 99 11/19/03 - WHOLE - BILL 030663 believe that's your name; I apologize if I have it wrong. It seems to me that business now moves in two ways. First, they force cities to compete with each other to compel the cities to give them a much better deal. And now today I heard this other proposal. Now we're being shamed by the fact we're not as good as other cities. These other cities that are only partly our size have many more theaters of appropriate size than we have. So if we're not being forced by competition to lower our standards, we're forced to contribute more because we're shamed into it. I don't think that's a direction to go. I would like to see a proposal in which business has confidence, which business says, "We're going to take the risk because that's what we're in business for. " Is Mr. Goldenberg here today?
I would like to know why in late October he contributed to Mayor Street's campaign 160,000 or 165,000. 100 11/19/03 - WHOLE - BILL 030663 It seems to me clear that that was a totally improper gift because by that time you certainly must have been discussing the question of this program or project. Probably you've already had discussions with the Controller, with Mr. Cuorato, with other City developments. And I think that kind of a gift has to be explained away. I don't know what the percentage of return that is as an investment. You contribute $160,000 around October 20th when the Mayoral race seems to be locked into dead heat and then you come back for a good number of millions thereafter. The rate of return, it's a wonderful investment, campaign finance. And that's why in the next hearing that will be held today we're going to be discussing the bad effect of it. But I wish Mr. Goldenberg were here so he could tell us all about why he decided on that day to contribute other than the reason he gave to the Inquirer this morning, that he liked Mayor Street. I guess he doesn't like the Sam Eric because he was ready 101 11/19/03 - WHOLE - BILL 030663 to give Mayor Street what Mayor Street felt he needed, but he's not willing to give Sam Eric what the Sam Eric needs to be a private enterprise. So that, Madam President, the question I really had in mind was to find out who's going to suffer the loss. Will it be a repeat if Goldenberg Group or Clear Sound pulls out? Will it be a repeat of the Inquirer article today: City of Philadelphia loses certain millions of dollars investment? Or will it be that the Goldenberg Group has befits business that invests money? Sometimes you invest money; it doesn't work. But the rate of return on a campaign financed contribution, there's nothing like it, nothing that can smell as sweet or return as great a dividend as a campaign finance contribution. And I wish Mr. Goldenberg were here so that if he feels that charge is unfair, he could have an immediate chance to answer it. Thank you, Madam President.
You're welcome. 102 11/19/03 - WHOLE - BILL 030663 Councilman Nutter is next for questioning. I would just like to remind my colleagues that we do have a number of witnesses that would like to be heard. And we have also the other Committee that I know we have people here waiting for the other hearing. Councilman Nutter, please.
Thank you, Madam President. Mr. Cuorato, let me ask you about -- there's been a lot of discussion about other venues and the impact on those venues. Has there been a study conducted which indicates whether there are a lack of these types of entertainment venues in Philadelphia?
The developer had a study done that covered the market demand for performance venues in Philadelphia.
Was the purpose 103 11/19/03 - WHOLE - BILL 030663 of the study to determine whether or not the project would work or was the purpose of the study to determine that there was a lack of venues in the City?
The purpose of the study was to determine whether or not the market existed for another venue of this type, whether in fact we had reached a saturation point and another performance venue of this type would do nothing more than drain patrons from other facilities.
And I'm sorry, and I did ask you a question; I apologize. The gentleman from Clear Channel, his name is?
What I didn't understand in response to a question was I heard you talking -- and I heard you say it a couple times -- talking about three venues in Philadelphia. I actually, unfortunately, 104 11/19/03 - WHOLE - BILL 030663 don't recall what the question was; I only heard the answer. So what were you responding to?
I believe I was asked by Councilman Clarke to compare the inventory of comparable theaters in Philadelphia with other cities around the country. And I used as the criteria theaters of mid range, 1500 seats up to 3 to 4,000 seats that are capable of hosting touring Broadway and other performing arts attractions. And Philadelphia has three of those.
They are the Forrest, the Merriam and the Academy of Music.
Now, what category do you put the Walnut Street Theater, Annenberg Center, the Mann Center, the Keswick, and the Kimmel? Are they not venues that have the same type of performances that you're talking about?
That's pretty much correct. The Mann is an outdoor facility, much larger. The Kimmel Center is primarily a 105 11/19/03 - WHOLE - BILL 030663 concert hall, and the other theaters are much smaller in seating capacity, audience capacity.
Let me just ask you a couple questions and see what your reaction is. I've been told that there are two venues with to 1800 seats, the Forrest and 10 the Merriam and that combined they are, I 11 guess in your language, dark, 40 to 50 weeks a 12 year; is that correct? 13
I can't speak for the 14 Forrest, but the Merriam is a theater that we 15 operate in conjunction with the University of 16 the Arts and the Theater League of Philadelphia. The Merriam is booked approximately 250 events a year, which when you consider that the summer is typically a very slow period of time is an incredibly busy venue. We've turned requests for use down frequently because we don't have available dates.
Now you operate theaters in Baltimore, Chicago, and Boston; is 106 11/19/03 - WHOLE - BILL 030663 that correct?