COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON RULES - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, April 30, 2008, 3:55 p.m. - - - Bill 080027 - Amending Philadelphia Zoning Maps by changing zoning designation of certain areas of land located within area bounded by Christopher Columbus Boulevard, (former) Reed Street, the Delaware River, and Tasker Street (extended), under certain terms and conditions. Bill 080028 - Approving Plan of Development for a Commercial Entertainment District in area generally bounded by (former) Reed Street, Tasker Street (extended), Christopher Columbus Boulevard, and the Delaware River. COMMITTEE MEMBERS PRESENT: Anna C. Verna, Chair James F. Kenney, Vice Chair Frank DiCicco William K. Greenlee Also Present: Councilman Bill Green - - - V A R A L L O Incorporated Litigation Support Specialists 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 4/30/08 - RULES - 080027, 28 I N D E X WITNESS HARRISBURG LEGISLATURE State Representative Mike O'Brien....... State Representative William Keller..... 10 Mary Isaacson, M. O'Brien Staff......... 15 PHILA. ENTERTAINMENT & DEVELOPMENT PARTNERS Carl Primavera, Esquire................. 45 Mark Brodsky, Architect, EwingCole...... 48 Ira Gubernick, Esquire, Klehr Harrison 100 CITY ADMINISTRATION *Shelley Smith, City Solicitor.......... 53 James Leonard, Deputy City Solicitor.... 58 Terry Gillen, Senior Advisor to Mayor... 64 Ed Gross, Greater Phila. Hotel Assoc. 125 *D. Rossi, Self-Empowerment & Employment 134 PUBLIC TESTIMONY David Schernecke, Queen Village......... 142 Mary Reinhart, Pennsport................ 144 Bernice Hamel, Society Hill............. 147 Rene Goodwin, Pennsport................. 154 Jeff Rush, Queen Village................ 158 William Kosman, Queen Village........... 163 Patty Griffin, Former Tierney Employee 165 Kathleen O'Neill, Pennsport............. 170 Walter Zimolong, Bella Vista............ 175 Sharon Johnson, Center City............. 178 *S. Haney, Southwark Hist. Dist. Founder 180 Hal Schirmer, Amateur Historian......... 186 R. Chiappetta, Financial Inst. Employee 191 Alfred Brown, Point Breeze CDC.......... 196 Wayne Rachman, South Phila. Block Assoc. 198 Terry Bennett, Casino Employee.......... 201 Robert Santora, South Philadelphia...... 204 Ed Kerlin, Pennsport.................... 207 Chuck Valentine......................... 210 (*Gave abbreviated oral testimony; handed in full written testimony attached hereto.) (Attached testimony from Chamber of Commerce.) * * * 3 4/30/08 - RULES - 080027, 28
Thank you very much. Good afternoon. This is a continued public hearing of the Council Committee on Rules regarding Bill No.'s 08002iII7 and 080028. I would ask Mr. McPherson to please read the titles of the bills. MR. McPHERSON: Bill 080027, an ordinance amending Philadelphia Zoning Maps by changing zoning designation of certain areas of land located within area bounded by Christopher Columbus Boulevard, (former) Reed Street, the Delaware River, and Tasker Street (extended), under certain terms and conditions. Bill 080028, an ordinance 20 approving a plan of development for a Commercial Entertainment District in area generally bounded by (former) Reed Street, Tasker Street (extended), Christopher Columbus Boulevard, and the Delaware River. 4 4/30/08 - RULES - 080027, 28
Thank you very much. I see that we have Representative Mike O'Brien and Representative Keller at the witness table. I must apologize for the delay in starting these hearings. However if you will identify yourselves for the record, you can then proceed with your testimony. REPRESENTATIVE O'BRIEN: Good afternoon, Madam President and Councilmembers. Representative Mike O'Brien, 175th Legislative District. REPRESENTATIVE KELLER: Madam President, I'm Representative Bill 18 Keller. I represent the 184th District, which includes all of South Philadelphia.
Welcome to both of you. Please proceed with your testimony. REPRESENTATIVE O'BRIEN: Thank you, Madam President. 5 4/30/08 - RULES - 080027, 28 It has been quipped that most attorneys' knowledge of riparian leases is acquired minutes before 5 sitting for the bar and forgotten 15 6 seconds after leaving the bar exam, 7 but over the course of the past two 8 years, riparian rights has become 9 dinner discussion around many tables 10 in Philadelphia. " If you think about a drive along Delaware Avenue, the tide comes in, you have water; the tide goes out, you have mud. That area is the riparian lands that we speak about. Now, it is the second-oldest property right in the Commonwealth. It is a property right that was 6 4/30/08 - RULES - 080027, 28 transferred from the British Crown to the Commonwealth of Pennsylvania, the second-oldest property right. It is -- it is a sovereignty issue in the Commonwealth. And over the years, it has been tested time and time again in the courts. It has been proven time and time again in the courts that the owners of the fast land are entitled to natural secretions of land that develops but not infill that comes over the years. Now, there has been some discussion regarding transfer of riparian rights on the other licensed facility in Philadelphia, SugarHouse, and the City of Philadelphia's ability to grant these riparian rights. There was a case made that in Act 321 of 1907, the General Assembly granted the City of Philadelphia the ability to do that, and there has been substantial discussion, most recently before the Supreme Court of 7 4/30/08 - RULES - 080027, 28 Pennsylvania, arguing that the Dam Safety and Encroachment Act of 1978 overrode that perceived authority. But more recently, the passage of Act 4 and 5, which I was the prime sponsor of, of 2008, clearly, clearly reinstates the sovereignty of the Commonwealth in that area. Now, what does all of that have to with the issue before us today? Simply put: The Foxwoods site, without riparian rights, cannot be, cannot be, developed. There is some discussion surrounding an issue known as "pierhead bulkhead," which I'm sure testimony will be given here today. These are arbitrary navigational marks that were established by the Secretary of War but were waived by the Army Corps of Engineers in 1990. Simply put: The Foxwoods Casino, without riparian rights, cannot be developed. Now, we go back, we go back to 8 4/30/08 - RULES - 080027, 28 the question of the sovereignty, the riparian rights passing from the British Crown to the Commonwealth of Pennsylvania, and that raises a very, very interesting thing that I touched on also, natural secretion of soils building up on the land versus infill. We raise a very, very interesting discussion. Where was the flow of the river in 1787? Where was the flow of the river? Now, Representative Keller, in his testimony, will produce a map which overlays the current Foxwoods site, which will show the flow of the river in 1787 and will show how it impacts on the Foxwoods site. And simply put: Without riparian rights, the Foxwoods site cannot be developed. Madam President and members of Council, you have the distinct pleasure of serving in a unicameral legislature. Oh, how we would love to have only one chamber to deal with, 9 4/30/08 - RULES - 080027, 28 but as you know, we deal with a bicameral legislature up in Harrisburg. Let me assure you that in our legislative process, in our legislative time, if legislation were introduced today, it would not be passed this session, it would not be passed this session. Therefore, Madam President, the Foxwoods site is not developable. I'd like to thank you for the opportunity to appear here today and I'd like to now yield to my colleague, Representative Keller.
Thank you very much. Are there any comments or questions from members of the committee of Representative O'Brien?
I'll wait for Representative Keller and then I will ask some questions.
Very well. 10 4/30/08 - RULES - 080027, 28 Good afternoon. Please identify yourself for the record. REPRESENTATIVE KELLER: Good afternoon, Madam President. I'm Representative Bill Keller from the 184th Legislative District. Although I thought it was great testimony, I think Representative O'Brien may have led everybody to believe that I was around in 1887 to see the -- (Laughter.) REPRESENTATIVE KELLER: I have a little knowledge of it but, believe me, it's not firsthand knowledge; it's knowledge from the law books. We are here today to testify because we believe the former City administration made a mistake, a big, glaring mistake, when they issued the riparian rights to the proposed casinos. I've been in the legislature for 16 years. We have passed many 11 4/30/08 - RULES - 080027, 28 riparian bills and, as Representative O'Brien said, there has not been much interest in riparian throughout the rest of the State, and it was just the few legislators who lived and represented the districts along the rivers who this came into play with. So I had introduced a number of riparian bills in the previous sessions, one taking the 37 acres at the Navy Yard and transferring it to the Philadelphia Regional Port Authority for port expansion. That is the way it was done, it's the way it was done for 200 years, and I believe it's the way it's going to be done in the future. To rest on the law of 1907, a law that has since been repealed, and when it was active, what it said was that the City did not have to go to the State to build piers and wharves in the City of Philadelphia because at the time, and even today, commerce on 12 4/30/08 - RULES - 080027, 28 the river is a big part of the City's economy. So they did not have to go, every time they needed to build a pier or a wharf, to the State and ask for this right. Like I said, it has been since repealed and, believe me, before I was elected, since the time I was years 10 old, I worked on the waterfront. I 11 know what a pier and wharf looks like; 12 it doesn't look like a casino, it has 13 nothing to do with casinos. 14 So that right, I believe, was 15 wrongly granted by the previous 16 administration, and I believe that's what we're here today to straighten out. As Representative O'Brien pointed out, we have since passed Act 4 and 5 of this legislature, which reiterates the right of the State, that the riparian rights must be given through an act of the legislature. The Governor can't grant them, the 13 4/30/08 - RULES - 080027, 28 Mayor can't grant them, no one can grant them; it takes an act the legislature. And we all know an act of legislature is not an easy thing to get passed. Two houses and the Governor has to sign it; it takes an act of the legislature, not a will or a whim of the Mayor to do that. And so, I believe the City Council is correct in going forward with these ordinances, and I believe we have also fixed that in the legislature in this session, and I believe we will do the right thing for the people of the City of Philadelphia when we're finished with this process.
Thank you very much. The Chair recognizes Councilman DiCicco.
Thank you, Madam Chair. Good afternoon, gentlemen. And first let me congratulate both of 14 4/30/08 - RULES - 080027, 28 you on your recent victories in the primary, especially you, Councilman -- Representative O'Brien, on your landslide victory. REPRESENTATIVE O'BRIEN: Councilman, there were four write-ins against me. REPRESENTATIVE KELLER: I don't know if the Councilman noticed, but I also had a landslide victory. (Laughter.) (Applause.)
It's kind of like the two definitions on "riparian"; that's left for interpretation as well. But congratulations nonetheless. Obviously, you can answer this, obviously, but I know Representative O'Brien spoke on this earlier, about the buildable land that would be left. You're suggesting that without the riparian rights, as is described 15 4/30/08 - RULES - 080027, 28 in the definition of the developer, there would not be enough buildable land for the casino to be -- REPRESENTATIVE O'BRIEN: Can I ask if --
Yeah, I think I know the answer, but I just need this to establish a record, if we could. REPRESENTATIVE O'BRIEN: If I could ask Mary Isaacson from my staff, if you would describe that. You have a better view than I do, please.
And hold the bottom of the mic if you can. (Ms. Isaacson comes forward and displays map to committee members.)
All right. Can you hear me? This outline here in red is the Foxwoods site approximately, according to the deed. Right here, this is an overlay over a map from 17, 16 4/30/08 - RULES - 080027, 28 I believe, 87. And this is showing where the river had been flowing at that time, when the Commonwealth's boundaries were established. And this has nothing to do with bulkhead and pierhead lines. So all of this was underwater and, thus, the land underneath the water belonged to the Commonwealth. It has since been filled in, but then we'll go back to my boss's definition of (inaudible).
If I could just go on to my question. There's obviously going to be two different definitions on what is riparian and buildable land. The Commonwealth -- REPRESENTATIVE O'BRIEN: Well, I think, Councilman, we can help clarify that definition best in the words of a Mr. Armentrout, who gave testimony on behalf of Foxwoods on September the 11th of last year in front of the House of Representatives 17 4/30/08 - RULES - 080027, 28 Oversight Committee, where he testifies, "The first part of our work is going to be setting pilings because the site has a high water table and is going to require significant pilings to support the facility that is to be designed." If we look at the Foxwoods plan of development, we'll see that the official part of the development is the farthest from the current flow of the river. The setting of the pilings speaks to the original flow of the river. So I think that upon further consideration, we'll see the definition of where the riparian lands do lie and what was natural and what was infill. REPRESENTATIVE KELLER: And I don't believe there are two definitions of "riparian"; there's one definition. We've always had it in the legislature, and for over 200 years, it's been the 18 4/30/08 - RULES - 080027, 28 same definition. If the casinos believe there's another definition, I'm sure that's why we're in the Supreme Court today, but in order to change the definition -- and believe me, I don't want to poke an eye at the Supreme Court, but in order to change -- REPRESENTATIVE O'BRIEN: Not until they render a decision. REPRESENTATIVE KELLER: In order to change that definition, you're almost going to have to turn upside down 200 years of real-estate law. There is one definition. We may have to clarify that definition, but the definition has been the same all along until the casinos came up with this piers-and-wharves idea that really doesn't exist.
Again, I think you're going right to the point, Representative Keller. I'm not suggesting that there are, in fact, two 19 4/30/08 - RULES - 080027, 28 definitions, but in theory, there are because the developer believes one thing and the Commonwealth believes something else, and there is, in fact, only one definition, which will be determined. This may require further litigation, I'm assuming. And if so, is the legislature prepared to follow up on that litigation? and is there any suggestion of what the timeline for that might be? I mean, we've been fighting in Council on a lot of different fronts, and as Council President will be sure to remind me, we're starting to run out of resources here.
Mm-hmm. REPRESENTATIVE KELLER: I believe it is -- we have been fighting it also.
Yeah. REPRESENTATIVE KELLER: And you 20 4/30/08 - RULES - 080027, 28 know we've done a good job with it.
Yeah. REPRESENTATIVE KELLER: When we do work together, things really do come out the right way. We have fought the Gaming Act, took any issue that involved the casinos and put it right to the Supreme Court. So we are -- there have been oral arguments in front of the Supreme Court already. The timeline has been condensed because it is already in the Supreme Court, and they have taken up the suit and it is being considered now, as we speak.
Okay. And we do appreciate that. REPRESENTATIVE O'BRIEN: Councilman DiCicco, I know you've heard this testimony and I'm sure you'll hear this testimony again today, where the licensee relies heavily on bulkhead pierhead, which is also found in the legal description of their property, on 21 4/30/08 - RULES - 080027, 28 the description of their site. But it should also be noted that in 1990, the Army Corps of Engineers -- and I'm going to ask Mary to hand up the public notice on this to the members -- waived, waived bulkhead pierhead, waived bulkhead pierhead, and used the mean high water mark. So we're back to the original definition of high, low water. So, you know, we're confident that at the end of the day, the traditional definition will stand.
Thank you. I just have one final question, Madam Chair, Madam President, and either of you can answer it or both. This morning, I received an e-mail from Gary Tuma of Senator Fumo's office concerning a press release that was put out today. Both your names were mentioned in that press release. 22 4/30/08 - RULES - 080027, 28 It's relating to legislation -- and correct me if I'm wrong -- that would enable the legislature to go back and possibly reconsider the ten-mile radius and possible airport re-siting, which would obviously need the ten-mile radius.
Can either of you or both of you just explain that for the record, what that means --
Explain that to me. This is the first time I'm hearing this, and I'm --
The airport is in the Council President's district. (Laughter.) REPRESENTATIVE O'BRIEN: Before -- before we get into the technical description of this legislation, I have to say that all due credit is to you, 23 4/30/08 - RULES - 080027, 28 Councilman DiCicco, for coming up with the airport idea, and you have been woefully ignored --
Ah ha! (Applause.) REPRESENTATIVE O'BRIEN: And you have been woefully ignored in this processes. It's a good idea. Thanks a lot.
Now that I'm in trouble with the Council President, but it was certainly received warmly by my constituents and your constituents. That was a proposal that I had talked to the Governor about in 2004, almost immediately upon the Gaming Act having been passed. And since that time, Madam President, there have been a number of community meetings, which both these representatives have been a party to, and we've had those discussions. 24 4/30/08 - RULES - 080027, 28 So that's how some of this conversation began, I guess, a year or two ago in Old Swedes Church or somewhere, at one of those community meetings.
The proposal was, when I spoke to the Governor, was that why wouldn't we look at developing these casinos at the airport, not because I don't want them in my district, which I certainly didn't want at the present locations, but I just thought there was enough infrastructure in place. We had enough available land that was City-owned land, public transportation, highway access, 30 to 40 million visitors a year. We anticipate 40 million visitors a year will be coming through our airport by 2010. So having done some of the 25 4/30/08 - RULES - 080027, 28 legwork and looking at the statistics, of most people spending two-and-a-half to three hours of downtime in an airport, and all the other things, I thought would be less harmful to residential communities because it would be considerably far -- (Applause.)
-- far enough away from residential communities, again, because of the public access, I-95, Schuylkill Expressway, Industrial Highway, and others. But that was back in '04 as an informal conversation, I think, that started with the three of us a year or two ago. I never thought it would get any legs, but that's why I'm asking you guys to explain where we are and what those considerations in this legislation may be all about. REPRESENTATIVE KELLER: What the legislation really does is have the 4/30/08 - RULES - 080027, 28 Gaming Board reopen up the hearings on the locations and the re-siting of the locations. It would take 120 days. They would have to report back on the viability of the relocation of the sites, and then within 30 days, we would have to make a determination.
Who would make the determination? REPRESENTATIVE O'BRIEN: I think the important thing about this legislation is that when the Gaming Board begins the hearings, it starts off taking testimony from the licensees, the community, and the City and State officials who represent the area. That's how the process begins on issues of infrastructure, on issues of public policy. The board now has time to consider that. When the board -- within 120 days, the board comes back 27 4/30/08 - RULES - 080027, 28 and it makes comments on public-policy concerns, it makes comments on accounts of current and future delays in implementation, and it presents a comprehensive site -- a comprehensive list of new sites with an accounting of positives and negatives associated with it. It then gives the licensee thirty days to respond to this list of proposed sites. The licensee -- if the licensee fails to respond positively to this, the board has thirty days at that point to issue a final order either approving the relocation or imposing additional conditions for development or ultimately revoking the license. REPRESENTATIVE KELLER: And as Councilman DiCicco remembers, when they did that the first time --
Excuse me. Identify yourself. That way the record will be -- just say your name again 28 4/30/08 - RULES - 080027, 28 when you -- REPRESENTATIVE KELLER: Representative Keller. The Councilman will remember when they did this the first time, the Gaming Control Board, I couldn't get on the list. I had to submit written testimony and the Mayor had to give you five minutes so that you could testify.
For ten minutes. REPRESENTATIVE KELLER: For ten minutes. Well -- REPRESENTATIVE O'BRIEN: He liked you.
I'm at a total loss to understand all that's going on now. What happens to the Supreme Court ruling? REPRESENTATIVE KELLER: Well, only the Supreme Court will know. (Laughter.) REPRESENTATIVE KELLER: But 29 4/30/08 - RULES - 080027, 28 that will determine the definition of "riparian rights," whether or not the City had the right to grant them.
So that's before the Supreme Court as we speak? REPRESENTATIVE KELLER: That's correct.
But it has nothing to do with the legislation that was offered this morning.
I'm talking about the legislation that was introduced today. REPRESENTATIVE O'BRIEN: But, Madam President, you have to be mindful the fact that the issue before the Supreme Court deals specifically with the SugarHouse site. Foxwoods did not apply for a submerged land license under Act 321 of 1907, so the issue before the Supreme Court on the submerged land license has no impact on the Foxwoods site. 30 4/30/08 - RULES - 080027, 28 (Applause.)
Thank you. Okay. The Chair recognizes Councilman Green.
Thank you, Madam Chair. Good to see you both, Representatives. Thanks for coming out here today. I just had a quick question about the legislation, which sounds like a terrific idea, and I'm just -- many times I end up introducing things in Council so that we can have a public debate that I don't necessarily expect to go anywhere, but I think the debate's important. To what extent do you think there's a realistic chance that this will pass with a veto-proof majority? So that we don't lose focus, you know, on where the fight is. REPRESENTATIVE KELLER: Well, 31 4/30/08 - RULES - 080027, 28 as you know, as a legislator, imagine that we have 102 in the House instead of 17, so we're -- there's no 5 guarantees. I believe there is enough interest, though. I believe the rest of the State, as we do, wants to get gaming up and running in Philadelphia, but because of what has been going on and our ability to talk to our members from all over the State, there's a feeling -- and I believe it's a majority that feel that these sites that were picked by the Gaming Control Board are the wrong sites in Philadelphia. (Applause.) REPRESENTATIVE KELLER: And because there is that feeling, I believe that we have a good chance of getting at least up and running a hearing on this. And like we say, the Supreme Court's going to make one decision, 32 4/30/08 - RULES - 080027, 28 but this is a -- this legislation is a solution to a problem we have right now. We want and the rest of the state wants and the City wants the casinos up and running for the revenues that they bring.
Right. REPRESENTATIVE KELLER: We all -- that is the bottom line. I never ducked that issue, I voted for it, I believe it is the time for that. And I've said it many times: You knew what you were getting when Governor Rendell was elected 'cause he ran on the issue of he was bringing gaming to the Commonwealth. And the legislature, I believe, did a good job. I mean, that's one of the best gaming acts that were passed. We taxed them at 54 percent, we did -- we're getting the revenues we needed for the property- tax reduction. The one flaw was that the 33 4/30/08 - RULES - 080027, 28 Gaming Control Board, I believe, in this instance, only in Philadelphia, they picked the two sites that were not only not the best sites; they were probably the two worst sites that were available to these venues.
Yeah. And I -- REPRESENTATIVE KELLER: And this is what we're trying to -- and that's all we're trying to do, correct it and have less of an impact in our neighborhoods, if we could get people to listen.
Well, please let us know what we can do, if anything, to help you in that effort, whether, you know, we can lobby or do other things. But also, if you don't have a veto-proof majority, though, it's not likely to result in law. So, I mean, we're still -- we're still -- unless that happens, we're -- 34 4/30/08 - RULES - 080027, 28 REPRESENTATIVE KELLER: It's not only --
We can't take our eye off the other ball is all I'm saying, right? This is not a likely scenario, or it is? REPRESENTATIVE KELLER: No, we're not taking our eye off any ball, but you also have to remember that the Governor and the rest of the State also wants these sites up and running.
Right. REPRESENTATIVE KELLER: So the more delays and the more lawsuits and the more -- and I'm sure that the people who are financing the casinos are saying, When are we getting a return here? We're putting this money up. When's there going to be a return on our money?
So maybe -- REPRESENTATIVE KELLER: So the best way to get this solved is to pick the sites that everybody will agree on, 35 4/30/08 - RULES - 080027, 28 get it up and running, and away we go.
So maybe we in Council can make CEDs at those sites, even prior to what you're doing, so that you can say, See, it's there. If we pass this law, the casinos will be able to go up right away. Is that something that would be helpful to you? REPRESENTATIVE KELLER: I believe the only things -- the casinos can't go up because they picked the two worst sites.
Would it be helpful to introduce CED legislation for the airport sites that you're talking about? REPRESENTATIVE KELLER: I would --
That would be -- (Indiscernible; parties 36 4/30/08 - RULES - 080027, 28 talking over each other.)
We have had those discussions in the past in this venue and, obviously, with the Council President because the airport is in her district. The decision was made, 'cause we were looking at doing this over a year ago, that we would not do that and just let all this other stuff play out. We don't want it to be perceived by the Gaming Commission and others, as they've said in the past, that this is just a way of putting roadblocks up because, as Representative Keller said, we're not about not having casinos. But we've done our job, I think, in City Council, and I thank my colleagues for putting up with me and everybody else for the last, I don't know how many, years of trying to bring to the attention of everyone, including the developers, our desire, 37 4/30/08 - RULES - 080027, 28 our sincere desire, to get these things up. And if, eventually, that's a decision that is made between the Council President, myself, and others that that would be an appropriate site, assuming that we can convince the developers, then we'll have that discussion at that time, but I don't think it's the appropriate time to make that determination.
I'm sorry. Does your legislation require convincing the developers, or would this be left to the Gaming Board? REPRESENTATIVE O'BRIEN: No, no. The legislation -- or the final determination of the board is precipitated on input from community, input from the licensee, input from the elected officials, viability of the sites, the probability of future delay at the current site. So no. 38 4/30/08 - RULES - 080027, 28
Thank you. I have no more questions. Thank you, Madam Chair.
Would it be possible for us to have a copy of that legislation that was introduced today? REPRESENTATIVE O'BRIEN: Absolutely, Madam President.
Thank you, Madam President. I'm still a little confused. Where does this fit in? I guess in the long run, the Supreme Court is going to make the decision on all of this. I mean, is that likely? Because, I mean, they have made a decision, whether -- and I've said before on record that I didn't agree with it, but they've made a decision so far based on this, and I'm assuming the licensees are going to 39 4/30/08 - RULES - 080027, 28 try to follow through on that. I guess I'm still a little lost on the -- REPRESENTATIVE KELLER: The only issue before the Supreme Court is the riparian-rights issue, so that's the issue they will determine. We believe they -- that the licensees do not not only have the riparian rights; if they don't have the riparian rights, they don't have clear title to the land. REPRESENTATIVE O'BRIEN: Right. REPRESENTATIVE KELLER: You cannot get clear title to the land if the Commonwealth owns the land -- the riverbed.
No, I understand. I guess that's what I meant by the Supreme Court's going to, in a sense, make that decision. They've already made the decision before on the -- you know, saying that we held everything up, okay? 40 4/30/08 - RULES - 080027, 28 So it's really based on -- you're assuming, and you may be right -- that they're going to decide in the Commonwealth's favor on the riparian rights, but if they don't -- REPRESENTATIVE KELLER: I don't -- when it comes to the Supreme Court, believe me, Councilman, I don't want to assume anything.
No, I don't want to -- no, I'm just -- I guess I'm just -- REPRESENTATIVE KELLER: I agree with you. The next step is in the Supreme Court's hands.
Right, right. REPRESENTATIVE KELLER: But if we pass this legislation, it doesn't say that they can't -- they don't own the land. I believe it's very hard for the Supreme Court to overturn 200 years of real-estate law. There will 41 4/30/08 - RULES - 080027, 28 be a lot of ramifications if they do that, right?
Mm-hmm. REPRESENTATIVE KELLER: A lot. So that -- I'm not a lawyer, I don't propose to be a lawyer, and I don't propose --
I'm not lucky enough not to be one, either. REPRESENTATIVE KELLER: I don't propose to be a Supreme Court justice, but this is trying to solve a problem that we believe we have, and probably the only people who don't believe we have a problem are the developers. Everybody else in the City believes there's a problem. We have two sites that do not work; we're trying to resolve that problem.
No, I understand that. I understand that. (Applause.) REPRESENTATIVE O'BRIEN: 42 4/30/08 - RULES - 080027, 28 Councilman Greenlee, Councilman Greenlee, again, separate the two sites. The issue before the court on the SugarHouse, the question is: Can the City issue and revoke a permit, a license? That's the issue before the court on SugarHouse. But also be mindful of the fact of separation of powers on the introduction and passage of riparian- right lease. The Supreme Court of the Commonwealth cannot dictate that we legislate.
We didn't think they could dictate to us either, but they have. I mean, I'm not saying you're wrong. I'm just --
And I don't mean to interrupt you, but didn't they take two City streets? And they just --
The 43 4/30/08 - RULES - 080027, 28 Supreme Court said that -- REPRESENTATIVE O'BRIEN: Didn't I hear today that you guys are taking that to the court, an unlawful taking?
We're just having a conversation here; it's not a debate. I think we're just trying to point out different issues.
And I don't know, I think it's just more complicated -- REPRESENTATIVE O'BRIEN: Oh, it's complicated.
-- than anybody realizes. REPRESENTATIVE O'BRIEN: We agree on that one, Madam President.
Mm-hmm. But as I said, the Supreme Court is going to do what the Supreme Court wants to do. And as I said, they did take two streets without any consideration 44 4/30/08 - RULES - 080027, 28 from the City or for the City and its residents. So that's where we are. REPRESENTATIVE O'BRIEN: But, Madam President, even the Pennsylvania Supreme Court answers to a higher power.
I'm sorry, I can't hear you. REPRESENTATIVE O'BRIEN: Even the Pennsylvania Supreme Court answers to a higher power: the United States Supreme Court. (Applause.)
You're welcome. Any further questions or comments? Councilman DiCicco, your light is on.
No, nothing further. Thank you. Thank you, gentlemen. 45 4/30/08 - RULES - 080027, 28
Thank you both very much. REPRESENTATIVE O'BRIEN: Thank you, Madam President.
Thank you. (Applause.) MR. McPHERSON: Our next set of witnesses are the Philadelphia Entertainment and Development Partners. (Witnesses come forward.)
Good afternoon, Madam President and members of the committee. Carl Primavera here, representing Foxwoods. With me is my partner Ira Gubernick and David Sander, my colleague. We, as you will recall, have presented a lot of testimony regarding the riparian-rights issue, so we're not going to repeat that. What I thought would be helpful, though, is, since we heard the presentation, if the committee would like, we'll just 46 4/30/08 - RULES - 080027, 28 return to the presentation board that our engineers prepared so that you can see our position with regard to the issue, and it might bring some clarity. It will take less than five minutes, and it might refresh your memory on what we presented before. That's Mark Brodsky, who's the architect from EwingCole. As he's doing that, I just again want to procedurally state where we are. The Supreme Court has ruled. The City has filed a petition for reargument or reconsideration; that's still pending. We're here, as we have been, for informational purposes, as a sign of respect that we have for this body and to be helpful in understanding at least our position. Obviously, nothing we do or nothing we can do can change the Supreme Court's ruling, and that's why I say this is really in the nature of 47 4/30/08 - RULES - 080027, 28 an informational briefing. With regard to that -- and I don't know whether Mark Cilloni is here also from Pennoni. Oh, good. If you could approach the board. And we're going to have smaller exhibits of the large board, which we'll hand out. There's a little bit of clarification as to what the Representatives were saying. With regard to Foxwoods, Foxwoods did not request riparian legislation or riparian rights from either the State or the City, because it's our position that we don't need them for this development. That's a little bit different than what I believe SugarHouse did. SugarHouse said they needed riparian rights. They secured them from the City, and that was problematic, I think, from some viewpoint. And then the City withdrew their approval. 48 4/30/08 - RULES - 080027, 28 So SugarHouse differs from Foxwoods in the sense that Foxwoods believes that it does not need riparian rights, whether it be from the City or the State. And I'll just have Mark explain where the riparian line is in our opinion and why we believe the line is such that we don't cross it for purposes of needing that authority.
Yeah. I understand the riparian line is the 1940 bulkhead line, which is highlighted, the straight line here. It's highlighted in red. And this -- the other squiggly line is the natural bulkhead line, which, at this point in time, is the mean high-water line.
And so under that position, our property rights are sufficient that we don't need, in our opinion, to go into the legal exercise 49 4/30/08 - RULES - 080027, 28 of securing riparian rights from the City or the State.
And I'm also passing up a letter from Stan Sneath, who's with the Pennsylvania Department of Environmental Protection. When this issue first came up with Representatives Keller and O'Brien, a letter was requested asking the State for some guidance. And as you'll see from the letter that David will hand up, the counsel for the DEP says that along the Delaware River within the City of Philadelphia for purposes of submerged-land licensing, which I assume is the riparian-rights licensing, the department generally relies upon the federal bulkhead line to define the shoreward boundary of the Commonwealth's submerged lands. (Addressing Mr. Brodsky.) So can you show that for us again where that is. 50 4/30/08 - RULES - 080027, 28 So that's what the State relies upon. We have not been trying to change the rules of the road; these have been the rules that have been in place. As a matter of fact, I am told that if we were to change the rules that the State has been relying upon, Wal-Mart down in South Philadelphia is illegally encroaching on State land, as are other large developments. They all relied upon the rule that we're relying upon. So the suggestion was made that the casinos are looking for a different interpretation. The reality is that people who are opposing the casinos are looking for a new interpretation, although perhaps based on one going back to the 1700s. So I just wanted to clarify that issue as well. We don't have anything more to present on riparian. We can answer questions that you may have, but we 51 4/30/08 - RULES - 080027, 28 covered it before in our plan of development and in our prior presentations. The other issue -- and I'm not sure of the agenda you're following. When we were here the last time, there were questions about the development agreement, and my partner Ira Gubernick is here to talk about that. I don't know whether you want to do that in a different sequence, or he can do it now, but he's the actual person who negotiated that development agreement. So that's really the other part of what we were thinking we were presenting today.
All right. If you don't mind, I believe the City Solicitor is scheduled to testify, and it would be on the agreement. We would prefer hearing from the City Solicitor first.
That would be 52 4/30/08 - RULES - 080027, 28 fine, Madam President.
And if you would stand by, then you could certainly give us your opinion.
Thank you. Our next witness? MR. McPHERSON: The City Solicitor. (Witnesses come forward.)
Good afternoon. Please identify yourself for the record and proceed with your testimony. CITY SOLICITOR SMITH: Good afternoon, Madam President, Councilmen DiCicco, Greenlee, and Kenney. I submitted my testimony in advance. Should I summarize it, or would you like me to proceed with the full testimony?
It's 53 4/30/08 - RULES - 080027, 28 fine with me if you would summarize it, and we'll have the stenographer transcribe it in full. CITY SOLICITOR SMITH: Okay, great.
Thank you. CITY SOLICITOR SMITH: My name is Shelley Smith. I'm the City Solicitor. I have with me Chief Deputy City Solicitor Jim Leonard, who was a member of the Law Department at the time that the development agreements were negotiated, so there may be some questions that he's better able to answer than I am. But I am pleased to appear before you today to testify on matters related to tax and claim settlement agreement dated January 4, 2008, between the City and Philadelphia Entertainment and Development Partners, LP, also known as Foxwoods Casino. 54 4/30/08 - RULES - 080027, 28 This agreement, executed by the prior City Solicitor at the end of the last administration, contains terms relating to a tax settlement along with a variety of community- impact issues such as traffic, public safety, design, environmental and water/sewer issues, public access to the waterfront, economic opportunity, and a Special Services District. The agreement addresses a number of different areas, which I will summarize. First, taxes. The most significant economic provision of the agreement relates to taxes. The City and Foxwoods disputed the extent to which real estate and use-and- occupancy taxes applied to Foxwoods. The agreement resolves this dispute by providing for a ten-year settlement on real-estate taxes consisting of annual payments from Foxwoods of $1.2 million, with 5 percent annual 55 4/30/08 - RULES - 080027, 28 increases. The agreement also settled Foxwoods' pending real-estate tax- assessment appeals for taxes due through 2007 for the sum of $1.75 million. With respect to use-and- occupancy taxes, Foxwoods will pay $1.1 million annually for the first ten years and 3.5 million annually for the following ten years, with annual consumer price index adjustments for the second ten years. Finally, the settlement provides for ten years of additional payments to the City calculated as a percentage of Foxwoods' gaming revenues, with minimum payments of $3.2 million and a maximum payment of $5.5 million annually. Second, traffic. The agreement also contains provisions relating to traffic, including road modifications and improvements, 56 4/30/08 - RULES - 080027, 28 traffic control and mitigation measures, including a requirement that Foxwoods pay its fair share of any new I-95, although the term "fair share" is not defined. Three, public safety. In the area of public safety, Foxwoods will provide ambulance service for emergencies and will pay up to $40,000 for routing 9-1-1 calls for the casino. Fourth, water/sewer issues. Foxwoods will install a new enlarged sewer pipe for the Tasker and Reed Streets sewer systems. Foxwoods will pay the first $5 million in costs, with any excess being credited against its tax-settlement payments. The agreement also contains provisions for design in relation to the plan of development, environmental measures, public access to the waterfront, an economic-opportunity plan and a special services district. 57 4/30/08 - RULES - 080027, 28 That concludes my summarized testimony. I would be pleased to answer any questions you have at this time.
Thank you very much. I said I feel somewhat uncomfortable asking you questions when you were not part of the agreements that were made. CITY SOLICITOR SMITH: Thank you. I appreciate that.
However, I think, for the record, we should indicate exactly what transpired, if you don't mind. CITY SOLICITOR SMITH: Sure.
You testified that the prior administration settled tax disputes relating to real- estate taxes on pending real-estate tax appeals and on future taxes that would be owed. Foxwoods, we understand, agreed to pay $1.75 million for taxes 58 4/30/08 - RULES - 080027, 28 owed through 2007. What was the City's claim for? And can you tell us, what was the rationale for the settlement? CITY SOLICITOR SMITH: Uh, yes. Let's see. (Addressing Mr. Leonard.) Do you think you can speak to that one can clearly?
James Leonard, Law Department. Madam President, Foxwoods had filed a pending tax-assessment appeal, as you said, on taxes, real-estate taxes, due on the unimproved value of the land, I understand, through December of 2007. That case was ongoing, and I was not personally a part of the settlement negotiations. That was directly the prior solicitor in our tax unit. But there was a dispute about the value, what the appropriate valuation was of the assessment of the 59 4/30/08 - RULES - 080027, 28 land. And ultimately, the resolution 3 that was reached was, as you said, $1.75 million payable in two installments, the first of which has been paid, the second of which is not due until, I believe, the opening of the casino or 2011 -- I believe that's correct -- whichever is earlier. CITY SOLICITOR SMITH: The City's high estimate for the tax liability for the Foxwoods project, which was based on the purchase price, was $1.3 million. The low estimate was $300,000 per year. Each number's per year, based on an assessment that we make based on the likelihood of success and the various claims and defenses available.
Just so we have an easier understanding of it, how many years old was the claim? How much was the total principal? And what, if 60 4/30/08 - RULES - 080027, 28 any, interest and penalty were pending potentially? What did they -- what do we think that they owed us and how much did we settle for 1.75? CITY SOLICITOR SMITH: I'm sorry. What do we think they owed us and --
And we know we settled for 1.75, but what did we think they owed us? CITY SOLICITOR SMITH: Well, we actually settled for $1.75 million in the first year. What we did was estimate the liability for a certain period of time, and so we estimated over time what that amount was likely to be per year. Again, the high estimate was 1.3 million.
Is this -- and maybe I'm misunderstanding what you're asserting. Was this a number of years where the taxes weren't paid? CITY SOLICITOR SMITH: Well, 61 4/30/08 - RULES - 080027, 28 the issue was the ten-year tax abatement.
Oh, okay, fine. But were there outstanding taxes on the undeveloped land over a period of time?
Yeah. The taxes that were in dispute -- my understanding is that the taxes that were in dispute as a part of the pending real-estate tax assessment appeal, they are different than the tax-abatement issue.
No, I -- yeah. Let's just remove the tax- abatement issue for a second. What taxes were owed on the undeveloped land?
And could we also find out how many years it went without being paid?
Yes. 62 4/30/08 - RULES - 080027, 28 CITY SOLICITOR SMITH: Yeah, we can find that out.
And this is only a period of time where the Foxwoods owners owned the land, or is this -- was this debt outstanding -- what had to be paid when the land got transferred from, I guess, Tower to Foxwoods?
I believe the assessment appeals that Foxwoods brought were for when it -- from the day when it purchased the property through December of '07.
Do you -- or maybe Councilman DiCicco knows how long they owned the property once they -- since they bought it from Tower, how 63 4/30/08 - RULES - 080027, 28 many years.
5, okay. All right. So if you could get those numbers, I would appreciate it.
Okay. With respect to use-and-occupancy tax, Foxwoods agreed to pay certain amounts for the first ten years and $3.5 million annually for the next ten, with annual CPI adjustments for the second ten years. Are these payments fixed even if the rate of the use-and-occupancy tax were to increase? CITY SOLICITOR SMITH: Yes, yes.
Since the School District imposes the U&O tax, as authorized by City Council, did the District take part in the 64 4/30/08 - RULES - 080027, 28 settlement negotiations? If they did not, can you tell us why not?
I do not believe that they did take part in the negotiations, to my knowledge, and I cannot say why. I know that the previous solicitor settled the matter. He believed he had the authority to settle the matter of the use-and- occupancy taxes on behalf of the School District.
It is our understanding that Foxwoods also agreed to make additional payments to the City for ten years. Did they agree to make any additional payments to the School District?
Very well. And we just touched on public safety. The Administration has previously testified that it refused to accept Foxwoods' offer for emergency- response services because the Fire 65 4/30/08 - RULES - 080027, 28 Department had to control all such services. Why are you now testifying that Foxwoods will provide emergency ambulance services? (Witness comes forward.)
Hi, Council President. I'm Terry Gillen. I'm senior advisor to the Mayor. I think what the Solicitor's been testifying to is the agreement, obviously, that was reached before we came in. Since January, the Fire -- both the Police and the Fire Commissioners have determined that, especially in the case of the Fire Commissioner, which was your question, that even though this was agreed to by the previous administration, that because of the way Fire Department calls are handled, that it would be irresponsible for them to give up control over fire calls, that ultimately, if the -- if somebody 66 4/30/08 - RULES - 080027, 28 can't get through, it's the City that's liable. So they've made a determination that regardless of what was agreed to, it's going to be the Fire Department's responsibility in the end. So that's the reason for their previous testimony.
Mm-hmm. Thank you, Terry. You also testified in your testimony that Foxwoods would pay the first $5 million for an enlarged sewer pipe for the Tasker and Reed Streets system, and that any excess will be credited to its tax settlement payments. Can you tell us, why isn't this money being credited to the Water and Sewer Fund?
Well, don't you think we should have an 67 4/30/08 - RULES - 080027, 28 answer? CITY SOLICITOR SMITH: Yes. We'll look into that.
What are the limitations that Foxwoods would impose on access to the waterfront? CITY SOLICITOR SMITH: The agreement provides that Foxwoods may impose limitations in connection with construction, repairs or maintenance, or any other event or condition that Foxwoods believes may adversely affect public safety or security. Or in connection with special events such as weddings or concerts or other functions that are being held at the facility, it indicates that Foxwoods will use good-faith efforts to restrict the size of events that use the waterfront promenade such that public access will not be reduced to an area that is the width of less than 68 4/30/08 - RULES - 080027, 28 ten feet more than once per week during the months of April through October, when use of the waterfront by the public would be heaviest.
Can you tell us, when will an economic opportunity plan be available for City Council's review? CITY SOLICITOR SMITH: I believe that an economic opportunity plan -- I believe that Foxwoods is in the process now of working with the City to finalize its economic opportunity plan. I can't tell you when it will be completed for City Council review, but I know that they have been in communication with the City to submit such a plan. (Solicitor Smith confers with Ms. Gillen off the record.) Ms. Gillen tells me she thinks it should be ready within the next couple of weeks.
Follow-up question on that? CITY SOLICITOR SMITH: Yes. The Chair recognizes Councilman DiCicco.
Thank you, Madam President. The plan that is being worked on on the employment and economic opportunity, is that going to be something similar to what we've worked out at the Convention Center, the diversity plan? CITY SOLICITOR SMITH: I'm not familiar with the specific details of the plan. I know that SugarHouse also submitted an economic opportunity plan, and it's my understanding that the plan that Foxwoods has been working on with the City is similar to the plan that SugarHouse submitted.
Yeah. Although that plan passed Council, I'm 70 4/30/08 - RULES - 080027, 28 still not even happy with that diversity plan 'cause a couple of unions are still withholding information that we felt was important to include Philadelphians in the workforce there. I do have a couple of questions as it relates to traffic. Do you have any estimate on what the cost would be for the traffic mitigation measures that -- as it relates to Phase I of the project? CITY SOLICITOR SMITH: The agreement does not contain an estimate of the cost of transportation mitigation -- of traffic mitigation.
Is there an understanding that there would be a need for an additional ramp off of I-95? Is that in the agreement? Was there any discussion that speaks to that in the agreement? CITY SOLICITOR SMITH: The agreement makes reference to the fact 71 4/30/08 - RULES - 080027, 28 that -- and I'm quoting. The discussion of solutions to date has involved, among other things, a new ramp off of Interstate 95, but that is not a definitive nor the only solution to the transportation needs of the community in and around the Foxwoods Casino Philadelphia complex, end quote.
In that context, do you know if there was any discussion as to what the cost of the ramp would be, assuming that that was one of the options that had been agreed to? CITY SOLICITOR SMITH: Do you mean in connection with the negotiation of the agreement? Was there any discussion of the cost in connection with the negotiation of the agreement? (Addressing Mr. Leonard.) Do you know?
I don't believe that there was a discussion. The most -- what the agreement reflects is 72 4/30/08 - RULES - 080027, 28 that, and I think the Solicitor testified to this, is that Foxwoods committed to funding its fair share of an I-95 ramp, which was what they -- I believe they test -- my understanding is that they testified to before the Gaming Control Board. As the Solicitor testified, that was never defined, and I'm not aware that -- of an estimate that was discussed for the actual cost of the ramp.
So we could have a possibility of an $80 million ramp, and we would be relying on Foxwoods to make the decision as to what they believe is a fair amount of contribution to that? (Laughter.) CITY SOLICITOR SMITH: Well --
I'm -- I'm -- CITY SOLICITOR SMITH: Is that a question?
And 73 4/30/08 - RULES - 080027, 28 understanding that -- and as the Council President said, I know you were not there and not -- CITY SOLICITOR SMITH: Yeah.
I'm just trying to, for the record, understand this, 'cause there was some early discussion a year or two ago about the possible need for a ramp, that that would help mitigate some of the problems. CITY SOLICITOR SMITH: Right. I'm aware of that, yeah.
There was some discussion that it would come off the southbound ramp -- it would be a southbound ramp within the I-95 right-of-way that would exit people east onto Dickinson Street at Columbus Boulevard. I mean, that was some of the discussion. CITY SOLICITOR SMITH: Mm-hmm.
And we recognize that that's a possibility, 74 4/30/08 - RULES - 080027, 28 that it could be, but we were always wondering who was going to pay. I mean, ultimately, somebody has to pay for it. Was it PennDOT? was it a combination of PennDOT and the federal government? 'cause I-95's a federal highway. What was the City contribution and what would the Foxwoods contribution be? And we still have not gotten there. And it's not your faults. As I said, we still just can't get to that. 'Cause that's crucial, that would be crucial. CITY SOLICITOR SMITH: Right.
I have a couple of more questions, but I'll yield to Councilman Greenlee for the moment.
Thank you, Councilman. Just on that same subject, the term "fair share" obviously sounds like pretty a broad term. Is that 75 4/30/08 - RULES - 080027, 28 something that's oftentimes put in an agreement? Because -- and "would fair share" be -- to double up on the -- does it mean kind of what Councilman DiCicco just alluded to, that -- who determines the fair share? Would it be Foxwoods if they -- you know, is it a negotiation thing? I'm just trying to -- 'cause it sounds like an awful vague term. CITY SOLICITOR SMITH: Well, I think we would certainly negotiate what that means.
Mm-hmm. CITY SOLICITOR SMITH: And, again, I was not there, but I do think that what the term is intended to convey is that the need for a ramp from I-95, if that's the solution or one solution to the traffic issues, is in some measure attributable to the Foxwoods development. And so fair share in terms of 76 4/30/08 - RULES - 080027, 28 the cost of that ramp would be determined by how much of the need for the ramp -- what percentage of the need for the ramp and the additional traffic that's going to be -- that the ramp is going to absorb --
Mm-hmm. CITY SOLICITOR SMITH: -- is attributable to the Foxwoods -- that percentage of traffic would relate to the interpretation of "fair share" for the cost. If that makes sense.
Sort of. CITY SOLICITOR SMITH: Do you want me to try it again?
Well, I think I get what you mean. I guess if you -- CITY SOLICITOR SMITH: I mean -- (Indiscernible; parties talking over each other.)
It's hard 77 4/30/08 - RULES - 080027, 28 to define, I guess, right? CITY SOLICITOR SMITH: Yeah. I mean, we'd try to figure out what percentage of the additional traffic using the ramp is generated by the casino development, and then that would be sort of a baseline for discussion of how much of the cost of the ramp would be borne by Foxwoods, 'cause that's the -- I think that's the intent that the fair share, in quotes, is determined by the fact that the need for the ramp is generated by the casino development in the first place.
And that speaks to just Phase I. Now, where I'm going with this is, if there were to be a Phase II and III, what, if any, position or opinion does the current 78 4/30/08 - RULES - 080027, 28 administration have as it relates to the need for an additional ramp? CITY SOLICITOR SMITH: Well, I'm not entirely sure that the Interstate 95 ramp is related to Phase I or to Phases II and III.
Well, what ramp -- well -- CITY SOLICITOR SMITH: No, no, no. It -- I'm not -- I understand that -- just in reviewing the Planning Commission's approval of this and what was submitted to the Planning Commission, it's not clear to me that the Interstate 95 ramp and the need for that ramp is related to Phase I, or is as related to Phase I as it's related to Phases II and III. If you look at the plan that the Commission reviewed, you'll see there's some discussion about that.
I -- CITY SOLICITOR SMITH: So I'm not sure. 79 4/30/08 - RULES - 080027, 28
For the sake of discussion, I will just say that I may agree. CITY SOLICITOR SMITH: Okay.
But in the project plan, there was Phases II and III. CITY SOLICITOR SMITH: Right.
And I think in the minds of most people, there would be a necessity to have a ramp. And if somebody wants to dispute that, they certainly can. So, again, I -- you know, government finds itself doing these things often. We do one thing without looking many years down the road and then we have to come back and spend a lot more money to correct what we should have done in the first place. CITY SOLICITOR SMITH: Mm-hmm.
So in that context, I think we need to be looking at what if Foxwoods does get built 80 4/30/08 - RULES - 080027, 28 there. CITY SOLICITOR SMITH: Mm-hmm.
What are we going to do in long-term planning as it relates to mitigation of traffic and the ramp being one of those ways in which we can mitigate the traffic problems? CITY SOLICITOR SMITH: Right. And --
So I think it's something that really needs to be addressed. CITY SOLICITOR SMITH: And if it were determined that a ramp, an additional ramp, from I-95 were necessary to ease the traffic problem created by Phase I, then certainly I could take the position that the agreement requiring them to absorb their fair share of the cost of that would relate to whatever need for that ramp exists with respect to Phase I.
We always 81 4/30/08 - RULES - 080027, 28 try to figure out what "fair share" means, but I think the reality is that if business is what we anticipate it to be, we know we're going to have serious traffic problems, which has really been the driving force behind this whole opposition from day one. All the other things, I think, could have been resolved. How do we do our best to mitigate traffic conditions that will have the least amount of negative impact on surrounding communities? And the ramp has always been on the table as one of those considerations. But for -- not to be in agreement, and I'll say it again, it was not your agreement, but going forward, it should be in an agreement or discussed at least about how we put it into an agreement. (Applause.)
We need to be more specific than the prior 82 4/30/08 - RULES - 080027, 28 administration was as it relates to traffic going forward.
That's a part of my question. Considering the haste with which this was done, the vagueness of some of the language, the fact that this administration was not part of this negotiation and are kind of stuck with it now, what is your legal opinion about our standing and the ability to go back and revisit the agreement? Considering the fact that, again, all of the line of questioning that Councilman DiCicco and Councilman Greenlee laid out relative to not knowing what exactly -- there's no -- it's not a specific agreement as people would like, what legal standing do we have to go back and say, Look, you know, a new administration, you know, how do we sit down and start talking about this thing in more specifics? 83 4/30/08 - RULES - 080027, 28
Could I be a little more specific on that question? CITY SOLICITOR SMITH: (Nods head.)
Can this agreement be amended and/or can the Administration void this agreement? CITY SOLICITOR SMITH: I'm not sure that we've found a legal basis to either renegotiate it or to void it.
But there aren't -- aren't there other -- CITY SOLICITOR SMITH: There have been significant issues raised, Councilman Kenney; I understand that. I understand that this administration has serious concerns about the haste with which this agreement was negotiated and the circumstances surrounding its negotiation. And we have been looking at those issues -- all of those issues in relation to what the City's options 84 4/30/08 - RULES - 080027, 28 are from, I would say, January 7th-and-a-half, but --
And I would not want you to lay them out now. CITY SOLICITOR SMITH: Mm-hmm.
I just want to make sure that there are some options that you're reviewing to get us to an agreement, or at least a form of an agreement, that is intelligible and can tell us what is going to happen. I mean, one of things that just popped up in this hearing today is the -- when you read about the contribution of Foxwoods to the sewer main on, I guess, Tasker and Reed, I mean, can you envision what the traffic problem would be like during construction of that? I mean, I -- we went through, at Swanson and Snyder, which was almost a year- and-a-half, a two-year project that that diverted traffic to every street in the surrounding area. 85 4/30/08 - RULES - 080027, 28 If the sewer project is part of this Phase I issue or Phase II, they'll be up and running, and we're going to have to shut the streets down to do the sewers. I mean, it's just bizarre how this got done the way it did. And I want the people in the audience to understand that this administration did not do this and this city solicitor did not do this. And what we're looking for is some options to help -- and I know you want to do that -- to try to help us try to make some sense out of this.
Yeah. Terry Gillen. We are mindful of all of this, and part of the reason that the Mayor testified personally at the last hearing was to clarify that he has serious concerns about this location. And the reason he has serious concerns 86 4/30/08 - RULES - 080027, 28 about this location, Councilman, is because some of these problems we simply have not been able to solve. If we were to -- (Applause.) (Cheers.)
That's not to say that we won't be able to solve them, but up to now, we haven't been able to solve them. He has asked us, for example, to take a complete relook, based in large part on information that has come out at these hearings, about traffic. He's asked us to take another look at some of these traffic issues and to make sure that the traffic numbers and the traffic mitigation plan that the Streets Department has been putting together with Foxwoods and with PennDOT is really going to do what it's supposed to do, because we have reason to believe that it won't. So -- 87 4/30/08 - RULES - 080027, 28
Striping -- painting stripes in the street is certainly not going to change this.
Correct, correct. Or widening streets to eliminate sidewalks --
-- in ways that pedestrians will not then be able to get to the waterfront. There are serious problems. So I just want to say that it's the reason that, as the Mayor said, we have serious doubts about whether Phase II and Phase III of this project can happen. We really -- I mean -- and mindful that we all want the revenues that the Council President referred to earlier and we'd like to get this built. 88 4/30/08 - RULES - 080027, 28 To put this facility in a location where Phase II and Phase III may simply be logistically not feasible at a complete buildout troubles us from a revenue standpoint. And the Budget Director is very concerned about this as well. So we're with you on this. And if we had a solution, we'd tell you what it is, and we're trying hard to find it, if there is one.
I have one final question. Thank you. What is the approximate cost of the additional public-safety personnel as it relates to both casinos? Is that in the agreement? CITY SOLICITOR SMITH: I was about to say if you want to know what's in the agreement, the additional cost of public-safety personnel is not reflected in the agreement. It's my understanding -- it's my understanding that the public 89 4/30/08 - RULES - 080027, 28 safety cost that is reflected in the agreement reflects the incremental cost of additional responses generated by 9-1-1 calls from the casino development.
If this wasn't such a serious issue -- I tend to think of the old -- remember that old commercial many years ago like, "Where's the beef?" We have no -- there's nothing in here to give us anything to, you know, to even digest. I'm through.
Thank you. The Chair recognizes Councilman Green.
Thank you, Madam Chair. Good afternoon. CITY SOLICITOR SMITH: Good afternoon.
I just want to clarify something that was said 90 4/30/08 - RULES - 080027, 28 about the settlement agreement, and that is, the only dispute that existed at the time this was signed was about previous years' tax assessments; is that correct? In other words, the only litigation, or threatened litigation, was regarding previous years' tax assessments. CITY SOLICITOR SMITH: That's not correct. There were actually -- there were two aspects of the dispute. One was to taxes already owed, and the other was to the applicability of both U&O taxes going forward, use-and- occupancy taxes going forward for the developed property, for the activity on the developed property, and the applicability of the tax abatement.
Well, how can there be a case in controversy about whether or not a tax abatement is applicable to a property for somebody who hasn't yet applied for it and when there has been no change in law? 91 4/30/08 - RULES - 080027, 28 I mean, in other words, I don't understand how there's a controversy about whether or not -- if City Council doesn't change the legislation that exists in the City of Philadelphia, there is no controversy about whether or not a tax abatement is available. What is the controversy from the City's perspective?
In other words, we granted a forbearance, which extends longer than a year, without City Council approval, with no case in controversy regarding an abatement. There's no -- what's the case in controversy?
The prior solicitor -- my understanding was that Foxwoods' position was that it was entitled to a ten-year real-estate tax abatement by law. The prior solicitor believed that -- disputed that and 92 4/30/08 - RULES - 080027, 28 believed there was -- there was no case -- there was no action filed in court or in an administrative agency of the City. The Solicitor believed there was a dispute and that --
How can the Solicitor determine that there's a dispute regarding abatements when there's been no change in the law in this chamber? The law of the City of Philadelphia is clear: Every parcel is disparaged. That's not a legitimate dispute. You can't make up an argument in order to take away the authority of this body to determine whether areas are disparaged or not disparaged. That's not a case in controversy that the executive has the authority to do. (Applause.)
Do you agree 93 4/30/08 - RULES - 080027, 28 or disagree with that?
My understanding is that the prior solicitor believed that under --
What do you believe? CITY SOLICITOR SMITH: Councilman Green, with all due respect to our efforts to answer your question, I think the important thing to understand here is that the prior solicitor negotiated this agreement and the positions with the assistance of another attorney who was then in the Law Department or retained by the Law Department, and it was his analysis of many of these issues that drove the City's positions on these issues. And we're doing our best to explain it.
Is there a legal opinion that exists that says that there was -- that somehow there was a dispute as to whether or not the property was not disparaged under the 94 4/30/08 - RULES - 080027, 28 law that provides a ten-year tax abatement for every property in the City of Philadelphia?
Okay. Once again, I mean, it sounds like an ultravirus act by the previous administration. They did not have the authority to enter into a multi-year agreement when there was not a case in controversy, and I posit that that is one way to challenge this agreement. (Applause.)
Same thing with respect to use-and-occupancy taxes. That's determined by square footage, and what is the controversy about whether or not, you know, the situation exists? I mean, I've said this in public, in this chamber, before. And, you know, I'm disappointed that that hasn't been looked at. CITY SOLICITOR SMITH: No, I 95 4/30/08 - RULES - 080027, 28 think there --
And so that's with respect to what the Administration can do to undo this agreement. This body, because the Administration -- there are separations of powers and other issues. The Administration cannot by contract prevent this body from acting. This body can act to remove the tax abatement, and that would blow up the agreement. (Applause.) CITY SOLICITOR SMITH: Is your question whether, if Council acts to remove the tax abatement, that has an impact on the agreement? Is that a question that you're asking?
Sure, yes. And if you want to get back to us rather than -- I think it would be -- CITY SOLICITOR SMITH: Yeah, I think we would have to go back and look 96 4/30/08 - RULES - 080027, 28 at what the impact of that would be.
I think we ought to at least be cautious as to what we lay out in public in front of the lawyers for the other side. I mean, you know, having a discussion -- and I think we're -- Councilman DiCicco has been having this discussion for quite some time, but if there's some legal strategy that you have that you think you can untangle this thing, I'd rather these guys not know what it is. Thank you. (Applause.)
With due respect, I've publicly stated this strategy for two months now, and we should be acting on it. Thank you.
Thank 97 4/30/08 - RULES - 080027, 28 you. (Applause.)
I'm not suggesting we shouldn't take some action at some point in time. I just -- I mean, Mr. Primavera is a pretty competent lawyer and I know the people working with him are competent lawyers, too. I just would rather you not confirm publicly for the record what it is you intend to do until we're able to be briefed and we can move forward in that direction.