Philly Council grills 76ers execs over taxpayer support and community benefits for Center City arena

How can Philadelphians trust that a new 76ers arena won’t require taxpayer dollars? Why won’t the team offer more than $50 million to help mitigate the arena’s impacts? Why won’t the Sixers’ billionaire owners testify in City Council?

These were some of the questions lawmakers asked a pair of 76ers executives Wednesday during a tense five-hour hearing about the team’s plan to build a new arena on East Market Street in time for the 2031-32 NBA season.

Council is slated to vote on the project in just three weeks, and Wednesday was the second of eight days of committee meetings lawmakers are scheduled to hold on the arena before then.

While City Hall observers still expect a majority of lawmakers will eventually vote to approve the $1.3 billion project, Council members this week have raised myriad issues that will require further negotiation, and it’s now unclear that the project will receive a final vote by end of the year — which the 76ers have said is their deadline.

Under Council’s normal rules, the project would have to get initial approval in committee before Council’s Dec. 5 meeting if it is to pass this year.

Councilmember Mark Squilla, whose district includes the proposed arena site and who introduced the package of more than a dozen pieces of legislation needed to green-light the arena, said Wednesday that the final vote might not take place until 2025.

“I would not be surprised,” Squilla said, noting that the 76ers have previously pushed back their deadline for city approval several times.

After Wednesday’s hearing, Council President Kenyatta Johnson said he remained confident the vote could happen this year if the 76ers do their “due diligence.”

Here’s what you need to know about the 76ers’ testimony at Council:

The 76ers’ representatives at the hearing were chief corporate affairs officer David Gould and senior vice president Alex Kafenbaum. Team owners Josh Harris, David Blitzer, and David Adelman, the lead developer and face of the project up until Wednesday’s hearing, did not attend.

That didn’t sit well with Councilmember Cindy Bass.

“If you have something that you’re trying to get done, you’ve got to show up,” Bass said, adding that the team’s owners apparently didn’t see “the need to come and discuss their vision of the concept today, which is quite inappropriate and disrespectful.”

Bass was one of several members who asked tough questions about the team’s owners and corporate structure.

Councilmember Isaiah Thomas requested that the team move its corporate headquarters, which it relocated to Camden in 2016, back to Philadelphia, noting that it would increase city wage tax revenues.

”I think we should ask the Sixers to commit to that,” Thomas said.

Councilmember Mike Driscoll echoed that point later in the hearing.

And following an exchange in which the team emphasized its partnership with a Black-owned development firm and its commitment to businesses owned by women and people of color, Council Majority Leader Katherine Gilmore Richardson noted that the 76ers’ owners are all white men.

“Right now, we’re at 0% of minority or women ownership for this project, and then upon completion of this project it would still be 0%,” she said. “For those who are listening who care about some of our philosophers, I know one by the name of Jay-Z said, ‘Generational wealth — that’s the key.’”

On Wednesday, Council members’ desire for the 76ers to chip in more than the proposed $50 million to the project’s community benefits agreement appeared to be an unstoppable force. And the team’s insistence that it couldn’t go any higher increasingly looked like an immovable object.

What happens when they meet could determine the outcome of the project’s chances in Council.

Gould said the team would not go beyond $50 million, a total he said was based on the economics of the project. The team, he said, perhaps should have started negotiations with a lowball figure.

“Potentially shame on us for not starting low and negotiating up,” Gould said.

CBAs, as they’re known, are agreements in which a developer funds amenities and services for affected communities in exchange for their support of the project.

» READ MORE: SEPTA, community benefits funding, and a rush to approve: City Council members raise concerns about the 76ers’ arena proposal

Councilmembers Nina Ahmad and Rue Landau and others said this week that they want to see the team agree to contribute more before a final approval vote. Squilla told reporters that the project could stall in Council if no changes are made to the CBA.

“I don’t think there right now is enough votes to pass it,” he said.

The proposed CBA allocates half the $50 million to neighborhood uses. Other money would go to citywide purposes, including initiatives championed by the mayor.

About $6.3 million would go to Chinatown, the community likely to be most affected. A city-sponsored analysis predicted that half of the neighborhood’s 380 small businesses would lose economically if the arena was built.

Thomas noted that the deal contained $3 million worth of Sixers tickets for the School District of Philadelphia. He questioned why free tickets for kids were not offered by the team as a good-faith effort, instead of as part of the CBA payment.

Gilmore Richardson, meanwhile, asked the 76ers to commit to contributing $1 million per year to the Philadelphia Fund for Children, something the Phillies and Eagles did when they negotiated their stadium deals in the early 2000s. That would be in addition to the CBA, she said.

Several Council members expressed skepticism that the arena project would truly be cost-free for local taxpayers, as the 76ers have repeatedly claimed.

Councilmember Kendra Brooks noted that the team is planning to avoid paying property and use-and-occupancy taxes by temporarily donating the land under the arena to the city and making payments in lieu of taxes, or PILOTs — a common arrangement for sports facilities that is likely to save team owners millions.

The team has negotiated a $6 million-per-year PILOT with Parker’s administration, amounting to $180 million over the 30-year arena lease. Brooks cited an independent analysis that showed the team would have paid $450 million to the city and school district during that period if it paid regular taxes instead of PILOTs.

“Do you think [a PILOTs structure] is a good idea for school students, being as though we’re losing so many tax dollars around this?” Brooks said of the property tax, which funds the city budget and the school district.

» READ MORE: Philly stadium owners don’t pay property taxes. Here’s what that means for the Sixers’ arena proposal.

“Yes, we think it’s a good thing that we are significantly increasing tax dollars,” Gould said, referring to tax benefits such as increasing the amount of revenue that currently comes from the arena parcel, which is now part of the struggling Fashion District shopping mall.

The 76ers have often described the team’s plan to build an arena in Center City as a “privately financed” project despite repeatedly saying they are open to receiving state and federal subsidies.

Councilmember Nicolas O’Rourke said Wednesday that it was “disingenuous to call this a project with no public money” and that “Philadelphia taxpayers pay state taxes.”

O’Rourke pressed the 76ers representatives on whether they had already had meetings with state officials about subsidies.

“We have had very preliminary conversations,” Gould said. “Some of them have been in sort of the normal course of business.”

Council members gave the 76ers plenty of homework on Wednesday.

Johnson asked the team to produce valuations for how much the franchise is worth now and what it would be worth if the arena is approved. Many lawmakers demanded the team quickly wrap up its negotiations with SEPTA over how it will avoid adding costs to the beleaguered transit system. Meanwhile, negotiations will occur between Council, the administration, and the team over how to adjust the CBA.

All of that and more must get done in the next three weeks, which includes the Thanksgiving holiday, to approve the deal by the end of the year. So Councilmember Jeffery Young Jr. asked: “Why the rush?”

Kafenbaum, a senior vice president for Harris Blitzer Sports & Entertainment, which owns the team, responded that the Sixers “are already behind where we would need to be for this site.” The team is working backward from the arena’s planned 2031 opening, he said, calculating the time needed between now and then for design, demolition, and construction.

The team is well aware that in 2026, when demolition of part of the Fashion District would begin, the city will be celebrating the nation’s 250th birthday and hosting the Major League Baseball All-Star Game and part of the FIFA World Cup, the Sixers executives said.

“We’re very mindful of being sure we’re not disruptive to 2026,” Gould said. Demolition would start on the interior of the mall, he said, unlike the implosion that brought down Veterans Stadium in 2004.

Thomas asked if the team could assure that demolition would not affect tourism and events that year. Kafenbaum said the team would commit to having a detailed, ongoing conversation around ways to limit street closures and disruptions.

“That’s a professional way of saying no,” Thomas said.