May 7, 2009
By Kellie Patrick Gates
The zoning that Foxwoods Casino needs in order to operate at the former Strawbridge & Clothier site did not make it out of city council committee Thursday.
It was not the work of community activists that convinced Councilman Frank DiCicco, bill sponsor and Committee on Rules chair, to postpone a vote on the mapping bill that would place Commercial Entertainment District zoning at the site. It was not some committee members’ apparent frustration over a lack of details that Foxwoods says it could not immediately provide.
What stalled the bill was an unexpected request from a lawyer representing a commercial real estate firm – Gramercy Capital – which owns the top half of the building.
“Gramercy strongly opposes Bill 090295 (the mapping bill) as currently presented because we believe that a rezoning of the 801 Market Street site in the manner proposed is not in our best interests or in the best interests of our tenants,” said Joshua D. Cohen, an attorney with GreenbergTraurig. He spoke on behalf of his client. The tenants he referred to include the Government Services Administration, Citizens Bank, Community Behavioral Health Systems and others, Cohen said. (Links to the legislation considered follow this article.)
The Strawbridge building, located at 8th and Market Streets, has a condominium ownership structure. The Pennsylvania Real Estate Investment Trust owns the lower seven floors of the building and Foxwoods is in on-going negotiations to lease space from PREIT. It turns out that PREIT is also in talks with Gramercy Capital.
“We are currently in discussions with PREIT to address our concerns and believe that we may be able to do so if the Council’s vote on this matter was delayed for a brief period of time,” Cohen said. When asked to elaborate on Gramercy’s concerns, Cohen said he was not authorized to comment further.
DiCicco said after the meeting that the uncertainty led him to pull the bill until next week’s Rules Committee meeting, which is scheduled for 10 a.m. Wednesday. “There could potentially be” a problem with Foxwoods getting a lease from PREIT, he said, and so there was no point in moving forward with the legislation until things get worked out.
“This is a cheery bit of news,” said incoming Society Hill Civic Association president Rosanne Loesch, who wore a big smile after the hearing.
Foxwoods’ spokeswoman Maureen Garrity said the Gramercy/PREIT situation is a “landlord issue” and that “Foxwoods is hopeful that PREIT and Gramercy Capital Group can resolve this situation so Foxwoods can move forward at the Strawbridge & Clothier site.”
When asked which of Foxwoods’ previously proposed sites the casino would focus on if the issues at the Strawbridge site can’t be resolved (Delaware Riverfront and The Gallery), Garrity said she did not want to speculate, especially since Foxwoods is optimistic that the Strawbridge issue will be worked out.
The other DiCicco bill up for consideration, 090294, amends the city’s existing Commercial Entertainment District zoning classification. The most significant change: The City Planning Commission would have final approval on any development proposed in a CED. City Council would not vote on the plan of development.
Several people who spoke at the hearing said the new rules amounted to Council giving away their power and the responsibility they have to their constituents.
“With these bills, City Council appears to be abdicating its authority to the Planning Commission with regard to the Entertainment District by failing to require that Planning Commission actions come before Council,” said Tully Speaker, who spoke on behalf of the Logan Square Neighborhood Association. Watch Loesch and Speaker testify here and here. City Councilman and committee member Darrell Clarke expressed similar concerns, but said he would support the bill.
Even though Planning Commission Executive Director Alan Greenberger spoke first, he addressed this issue in his testimony. “Some people may argue that Council ought to maintain its approval rights over these and other major projects as a check on Planning Commission authority,” he said. “While the merits to this line of reasoning can be argued, we would maintain that development in the city has become too complex. Vesting the Planning Commission with final approval of Plans of Development signals to developers that their projects will be considered for their planning and design merits in accordance with a clear and consistent process.”
The bill changing the CED language passed committee, and is expected to be introduced to the full council at its next meeting, and up for a vote at the following meeting.
During the hearing, two committee members seemed perturbed with answers from Foxwoods investors group representative Brian Ford: Councilwoman Blondell Reynolds Brown and Councilman Wilson Goode Jr. The two repeatedly asked Ford questions about Foxwoods’ plans to hire minorities and women and how the three charitable trusts created by some of the investors would distribute money.
When Ford told Reynolds Brown that Foxwoods planned to honor hiring commitments it had previously made when the casino was working toward building on another site, Reylonds Brown asked for specific numbers. Ford said he did not have them memorized, but would provide the documents to the committee.
Ford brought up the charitable organizations when answering DiCicco’s questions about financing. Ford said the existing investors were asked to “make additional funds available to proceed with this location.” It was determined that the best place to get more money was from the current investors, Ford said, because it would be hard to interest new investors in a project where 42 percent of the profit is destined for charity, something Ford said was “unheard of” in the industry.
Brown said she liked this idea, but she wanted more specifics about how and when the money would be distributed. Ford said there would be no money until the casino was up and running, and the process would be made public once that happens.
Goode shot questions at Ford rapid-fire – at times before he even had a chance to answer. He demanded the names of the trusts, which Ford provided: The Silver Family Trust, The Rubin Family Trust and the Snider Family Trust. Yes, they have trustees, Ford said, some live in Philadelphia, and some in the suburbs. And all are obligated to give to causes in the city and region.
Ford said outside the meeting that the original investors have “well over $100 million” invested in the project to date. They are committed to providing more funding, he said, some of which may be through acquired debt.
Ford did not give a specific cost estimate, but said enough funding has been secured to cover the possible range. The cost depends on issues that remain open, he said, including the lease costs. See Ford’s presentation to the committee here.
Foxwoods does not yet have a design – that will also depend on the lease arrangements. They have not hired an architect, but have had several tour the building and propose ideas, Ford said. “Last time, we said let’s find an architect and let’s get going right away,” he said in a hallway outside council chambers. “This time, we are walking through a bunch of people we brought in from all over the place.”
Among the reasons Greenberger gave for the Planning Commission’s support: “We understand that gaming floors will be located on the 2nd and 3rd floors of the Strawbridge Building, thereby making gaming almost invisible to the public on the street. We further understand that the majority of the 1st floor will be made available to restaurants and other non-casino related commercial uses.”
But Ford said which floors are used for public access, especially at first, is undetermined. “I didn’t want to suggest that we had a plan,” he said. For example, he said, there might be code issues that would prevent use of upper floors without significant modifications, so the first floor would be used instead.
DiCicco reminded casino opponents that the state legislature decided Philadelphia would have two casinos, and the law was written so that would-be casino operators could propose the specific locations. The Strawbridge’s site is far preferable to the Columbus Avenue and Reed Street location that’s written on Foxwoods’ license, he said.
Foxwoods agreed to consider alternate locations under pressure from Mayor Michael Nutter, DiCicco and other city leaders. Nutter and other city officials like the location because they think it will help spur economic development in a part of the city that has lagged behind in that area. They also like the proximity to a major transportation hub. Foxwoods and PREIT appreciate these elements about the proposed site as well.
Foxwoods’ first step off the waterfront was a 10th and Market location at The Gallery at Market East. PREIT President Joseph Coradino testified at the hearing that the ownership of 10th and Market was too complex, since the City, the city’s Redevelopment Authority and PREIT are all involved.
“The 801 Market building is currently vacant on the concourse, street, second and third floors,” he said. “Having the ability to begin construction and fit out quickly is a positive for us as the landlord as well as for our prospective tenant.” Coradino did not mention any talks with Gramercy.
Foxwoods’ operating license requires it to have slots up and running by the end of May. Foxwoods will need to ask the Pennsylvania Gaming Control Board to grant an extension, similar to the one the PGCB granted SugarHouse earlier this week. Ford said if the city gives the needed zoning approvals, Foxwoods will also ask the Gaming Commission for a license location change – but not until the city makes its decision.
When asked after the hearing if he thought Foxwoods was ready to move forward, DiCicco told a group of reporters, “Based on what you heard today, they probably are not.” But, he said, Foxwoods officials have told him they will have more concrete plans “within the next couple of weeks.”
Several groups of community activists who are usually very visible at casino-related hearings did not participate in this one. Some of these groups have united into the No Casino in the Heart of the City Coalition. They held a press conference outside Council chambers prior to the start of the hearing.
Ellen Somekawa, executive director of Asian Americans United and a part of the Coalition, said that mobilizing for the hearings has started to feel like a waste of time. So instead, the group is focusing on an information campaign that will reach out through churches, synagogues and mosques. And members will write letters and visit council members personally, she said.
A letter has already been sent to DiCicco, asking that the CED legislation be amended to include requirements that will protect the community, including restrictions on hours of operation, and a prohibition of ATMs and credit-card lending machines and off-track betting facilities. The group is also requesting that the casinos be required to send monthly win/loss statements to gamblers’ homes and a demographic analysis of who is going to the casinos.
Some of those who testified in the hearing brought up some of the same issues. DiCicco said that they needed to ask their state legislators to amend the gaming law, because city council had no jurisdiction to do these things.
Click below to read Society Hill Civic incoming president Rosanne Loesch’s testimony in full and see the text of the proposed legislation: