Category: Philadelphia 76ers

As promised when she made her initial announcement last week, Philadelphia Mayor Cherelle Parker released a pile of documents yesterday relating to the proposed 76ers arena that she now endorses. I’m still going through them, but here are some of the highlights:

The pieces making all the headlines, presumably because they’re the ones that Parker is calling attention to and that are easiest to understand, are:

• a promise by the arena developers to use “best and good faith efforts” to hire diverse contractors and workers on the construction project, and
• a Community Benefits Agreement under which Sixers owner Josh Harris would provide $50 million over 30 years toward various education and small business projects

While the CBA is being described as going primarily to “impacted neighborhoods” — read: Philly’s Chinatown, which overwhelmingly opposes the arena project — the only pieces that directly deal with the impacts of the arena are $1.6 million in grant to “assist small businesses impacted during the construction” and $3 million in loans (available starting in 2030) to “stabilize and help expand Chinatown businesses.” A look at the timeline in the CBA payment schedule shows that the bulk of Harris’ CBA spending would come in the year 2032; the irregular spending makes it hard to calculate how much it’s all worth in present-day dollars, but I’m going to guesstimate around $30 million.

Meanwhile, the potentially bigger piece is a Rube Goldberg device of nested property transfers, in which the city would acquire the Sixers’ mall property and lease it to the Philadelphia Authority for Industrial Development, which would in turn sublease it to the team. This is the same plan that Harris first proposed last year, and it would have a bunch of immediate effects, some more clear than others:

• By putting the arena site in public hands, it would immediately become exempt from property taxes. Currently the site is under a tax-increment financing agreement that caps its property taxes at around $1 million a year; under the new plan, Harris would pay $5 million a year (scaling up by 10% once a decade) in payments in lieu of property taxes on the whole $1.55 billion development.
• Sports economist and property tax superexpert Geoffrey Propheter, after a quick look at the agreement last night, calculates that Philadelphia would get a total of $109.3 million in present value from the future PILOTs, which he says is “pitiful” for a project that size.
• Harris would pay $10 in rent for the entire 30-year lease term.
• It’s not immediately clear if the city would be paying anything to Harris for the arena property, or if he would be handing it over for nothing in order to get the tax exemption and PILOT deal.

With this many moving parts, it’s tough to say exactly what the total public subsidy to the Sixers arena project would be, but it’s certainly more than the Sixers “financing [the] project with no city funds,” as Parker put it.

Parker is promising a month of public town halls on the arena proposal, the first of which was last night’s — which Chinatown leaders skipped on the grounds that it was a dog and pony show announced with little warning. (The civic association of the adjacent Wash West neighborhood also came out against the arena last night.) City councilmember Mark Squilla has likewise promised a 30-day public review period. Parker says she’ll submit the legislation to the council on October 24. That’s not much time to suss out the fine print of the arena plan, but it’s better than nothing: sports lease experts and Philadelphia journalists, time to get cracking.

For months, Philadelphia Mayor Cherelle Parker has been hedging on her position on a new 76ers arena next door to her city’s Chinatown, most recently saying that keeping the team in town was “a priority,” but that “we have a process here in the city of Philadelphia that we are following, and we will allow it to play itself out.” Yesterday, that all changed, as Parker released a weirdly framed video declaring that “an agreement has been reached that will ensure that our Sixers are staying home”:

“I will be transmitting the related legislative package to our city council of Philadelphia for its consideration, where it must be approved. … This is an historic agreement. It is the best financial deal ever entered into by a Philadelphia mayor for a sports arena, and I wholeheartedly believe it is the right deal for the people of Philadelphia.”

Then Parker said she would have “a lot more to say in a forthcoming formal presentation,” and would hold town halls so that “the people have access to the facts.” Then she claimed the arena would create “hundreds of millions of dollars in new tax revenues” and “hundreds and hundreds of jobs,” and wrapped up without including any details of what is in this agreement or showing any of her math. (A previous report by the Sixers’ hired consultants projected $16.2 million a year in tax revenue for the city and school district, and was immediately jumped on by people with actual economics degrees as a load of hooey.)

What prompted Parker’s abrupt transformation into a 76ers arena stan is unclear, but public response was — unsurprisingly in a city where people oppose the plan by a more than 3-to-1 margin — overwhelmingly negative. Debbie Wei of the Save Chinatown Coalition wrote in a statement: “This fight is far from over. We are going to fight this, and we are going to the mat. It’s on.” And the reply thread to Parker’s video on Twitter was just brutal:

She said, “People of Chinatown, I hear you” while she was having secret, closed door meetings without them. — Andrew Lee

The same beer people will buy on Market St, they would have bought at Wells Fargo/Xfinity Live. She just became a multi millionaire with the kickbacks she’ll get from the unions. She’s a termite — Shaun

You’ll never be reelected again. Ruining Chinatown and separating the one of the sports teams all at once. Only doing this to get your pockets lined. Disgusting — Philly Sports Truther

Are you drunk? It would make sense because it would explain why you entered this ridiculous agreement. One term, Parker. — The Centryst

Why does this have the feel of a parody skit on SNL? — Brian Thuer

Actually fuck you for this. — PKSparkxx || #BlackLivesMatter

The last remaining obstacle to the arena going forward, it would appear, is now local councilmember Mark Squilla, who has been similarly wishy-washy to Mayor Parker up until now, saying first that he wouldn’t do anything that the neighborhood opposed but then pivoting to saying he’s “comfortable making that decision” on his own. Following Parker’s video statement, Squilla said only, “It’s up to us to look at that legislation and see if the proper safeguards are put in place, and if not, add those safeguards in place before an introduction can happen,” which translates as “yes, we are the city council, we consider legislation, that’s our job description.”

Next step is to see what new details, if any, Parker reveals in her formal presentation, but the battle lines seem pretty set regardless. It is, most definitely, on.

UPDATE: Wei emails that Parker held an invite-only meeting of selected Chinatown leaders yesterday afternoon, then “WHILE PEOPLE WERE STILL IN THE MEETING her folks posted that ridiculous video.” Classy.

One of the enduring myths of the proposed Philadelphia 76ers arena is that it would require no public money. That’s what team owner Josh Harris keeps saying, certainly — but it carefully overlooks the fact that the proposed arena site comes with a get-out-of-property-taxes-free card, though whether that card is worth $25-90 million or $900 million depends on who you ask.

That’s a debate for a different time, though, because it turns out that Harris does, in fact, want a guarantee of straight-up public funding — under one condition:

The team is requesting that its deal with the city include a provision that could allow the 76ers to receive local taxpayer backing in the future, according to a person with knowledge of the negotiations. The provision would apply only in the event that the city subsidizes a different Philly sports facility after the proposed basketball arena gets approved…

In that event, the 76ers would retroactively receive the same subsidy that the owners of the new facility get, the source said….

“If they commit to no city dollars and another arena gets built, then [the 76ers] would get the same thing” as the second arena’s owners, [councilmember Mark] Squilla said, describing the provision. “If somebody, say, Comcast wants to build a new arena and they say, we need $200 million — if we give them $200 million, then you have to go back and give the 76ers $200 million.”

So, like, any Philly sports facility? Ever? And how would a “subsidy” be defined? I have so many questions, please let this Philadelphia Inquirer article answer at least some of my questions—

In international trade, “most favored nation” status means that a designated country cannot be treated worse than any other nation…

THAT WAS NOT MY QUESTION THANK YOU

This clause has apparently become a sticking point in negotiations between Harris and Mayor Cherell Parker, and maybe helps explain Parker’s weirdly conflicted statement on the arena plan last week.

Not conflicted, meanwhile, are the many Philadelphians (organizers say 3,000-4,000, WHYY-TV says “scores”) who marched in the rain on Saturday to protest the arena plan and its potential impact on Chinatown. “It’s raining, it’s pouring and Squilla is snoring,” they chanted at one point, in reference to the councilmember who represents the proposed arena site and who has been close-lipped on whether he will support it, saying only that once legislation is ready, he’ll give community members 30 days to review it before he introduces it in the council. It’s pretty clear at this point what the community response is likely to be, but Squilla is certainly either looking to hear from constituents or looking to make it appear he is to provide cover for whatever he wants to do anyway, definitely one of those two.

Last night I did a podcast interview where one of the questions was (paraphrasing) “Do you think elected officials are starting to get smarter about not offering huge subsidies to sports team owners?” This morning, we learn that New Jersey provided a partial answer:

New Jersey Gov. Phil Murphy’s administration told the Sixers in a letter Monday that the state could award up to $400 million in tax credits — as well as borrow hundreds of millions of dollars — to support an arena in Camden and a broader “large-scale redevelopment project.”

This is not actually news per se: It was reported back in July that a Philadelphia 76ers arena in Camden would be eligible for up to $400 million in tax credits under the state’s ASPIRE program, which one public policy watchdog had called “another last-minute lame-duck special that will benefit big developers at the expense of everyone else.” But the letter from Murphy is the first official confirmation that New Jersey is willing to offer what it already said it would offer, so there is that.

Meanwhile, what does Murphy’s letter say about that “as well as borrow hundreds of millions of dollars” bit?

Furthermore, we are also prepared to work with the legislature to enable the structuring of up to $500 million of special-purpose bonds supported by fees and surcharges on tickets, concessions and parking (with no impact to New Jersey taxpayers) to support the development of an arena.

“With no impact to New Jersey taxpayers” sounds promising, certainly, but it’s the kind of promise that has been betrayed before. To pay off $500 million in bonds would cost about $30 million a year, which would require more than $30 in ticket, concessions, and parking surcharges per Sixers fan, which is a lot. (Maybe if the arena is super-successful at attracting concerts that could be $10-20 in surcharges per fan, but that’s still a lot.) So there’s at least a possibility that some of the bonds could end up being paid from taxes on tickets, concessions, and parking, which would indeed have an impact on New Jersey taxpayers; more once we see actual bond legislation, I guess.

If you’re now thinking that for Philadelphia or Pennsylvania officials, the most rational response would be, “The Sixers stay in the Philly area and New Jersey taxpayers have to pay for the arena and Chinatown can go on being Chinatown, where do I sign?”, you are decidedly not Pennsylvania Gov. Josh Shapiro:

“I’m confident that the mayor will bring this to a conclusion that works for her, for council, for the city of Philadelphia and that keeps the Sixers here in the city.”

Not sure whether Victor Matheson saw that quote before telling NorthJersey.com that “New Jersey is one of these states that could easily be used as a pawn” to “get into a bidding war,” but if not, good prescience, Victor! And podcast host, if you’re reading this: Nope, not smarter yet, check back in a couple of decades.