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March 29, 2007
TO THE PRESIDENT AND MEMBERS OF THE COUNCIL OF THE CITY OF PHILADELPHIA:
I am returning herewith Bill No. 070112 which would put before the voters a proposed amendment to the Home Rule Charter to prohibit City Council from taking any action that would permit licensed gaming within 1500 feet of a residentially zoned district, an Institutional Development District or certain residentially-related and other specified uses and prohibit the Department of Licenses and Inspection from issuing any license or permit authorizing licensed gaming within such areas. If enacted, the Charter Change Referendum would effectively prohibit licensed gaming on the two sites selected by the Gaming Control Board (GCB) or at any location in Philadelphia where gaming is economically viable.
The City undertook an unprecedented public process. Supporters of the proposed Charter amendment argue the residents of Philadelphia deserve to be heard on the issue of gaming. They have been. Gaming appropriately is authorized at the state level. Nowhere in the country do cities undertake gaming without state authorization. Pennsylvania is no different. Philadelphians through our representatives in the General Assembly voted unanimously in support of gaming in the City.
Residents of Philadelphia have been afforded the opportunity to substantially influence the development of gaming facilities. I remind you, beginning with my appointment of the 47 member Philadelphia Gaming Advisory Task Force in January 2005, thousands of Philadelphians have weighed in on the issue: hundreds of residents participated in a series of 10 public hearings in neighborhoods across the City; thousands more have met with City officials in a series of meetings with effected business, community and other stakeholder groups; others used the Task Force website to offer input; and 598 residents expressed their opinions through a scientific poll in which 83% of those polled indicated they found slots-only gambling acceptable.
The process and the report generated by the Task Force have been uniformly well received by all segments of the media and the broader community. The Daily News, in fact, called the Task Force report an "exhaustive, comprehensive review" that is "required reading, not just for the state Gaming Control Board as they review license applications, but for anyone who hopes to either locate a casino here or will be impacted by one. As we move forward with casino development the City is committed to engage local residents and others. I believe the current process offers the best opportunity to address our legitimate concerns without jeopardizing the benefits to the entire City.
Gaming is crucial to the Growth of the Hospitality Industry and Convention Center Expansion. There are hundreds of millions of dollars of economic benefit to be gained from the introduction of gaming. For the last 20 years, Philadelphia has focused on the hospitality industry as a significant component of the City's economic growth. Strategic investments in the development of the Pennsylvania Convention Center, Center City hotels, stadiums, and cultural assets along the Avenue of the Arts have grown the leisure industry into the fourth largest segment of employment in the City.
The proposed gaming venues located convenient to the Central Business District will strengthen the critical mass of cultural offerings available in Philadelphia. Visitors will have yet another reason to extend their stay in Philadelphia, spending the night, eating in restaurants, visiting museums, and shopping.
Not only does gaming provide our hospitality industry another significant visitor attraction, a total of 5 percent of the expected $3 billion in annual taxable revenue will assist in funding the expansion of the Pennsylvania Convention Center, allowing the facility to almost double its capacity and make it the largest contiguous exhibit space in the Northeast. The projected growth of the Convention Center is expected to lead to 2,200 new hospitality-related jobs and $145 million in increased annual economic impact in Philadelphia. The current Convention Center is a key part of the region's hospitality industry, accounting for more than 40 percent of our total tourism business. Negotiations regarding Convention Center expansion are at a critical juncture as soaring construction costs threaten project viability. Without gaming, or with a protracted delay in gaming, we risk losing the opportunity to expand the Convention Center.
Gaming will Support Unprecedented Job Creation. Under the leadership of Dr. Bernard Anderson, Professor of Management at the Wharton School of the University of Pennsylvania, the Economic Impact Committee of the Task Force concluded gaming will bring between 7,000 and 12,000 new jobs including: approximately 1500 gaming operation jobs, between 2100 and 4500 new jobs in ancillary operations at the two Philadelphia casinos, and between 3,900 and 6,400 new jobs from growth in businesses that support these industries. In addition, construction of the first phase of the two casinos will add approximately 1,000 construction jobs to the local economy. As a result of programs conducted by the OIC in connection with the Convention Center, the hospitality industry has become one of the industries offering significant entry-level jobs to people in our neighborhoods. The Administration's goal is to implement this model for entry-level job creation as we work to develop a robust gaming industry in Philadelphia. The Task Force projected gaming will generate an estimated $34 million in wages during construction and $69 to $78 million in indirect construction-related job wages. Once Phase I is completed, it is projected annual wages will exceed $47 million, a number that will increase substantially as future phases are developed. Phases II and III will include hotels, retail malls and condo developments breathing life into the City's New River City Development strategies.
The Revenue for the City will be Substantial: The General Assembly has dedicated approximately $100 million in revenue annually to fund substantial reductions of Philadelphia's wage tax without further crippling the City's ability to provide core City services. More immediately, the City's proposed FY 08 to FY12 Five Year Financial Plan includes $71 million in gaming related host fee revenue for the City over just the next five years. In addition, the increased rate of growth in tax revenue projected in the Plan is supported in part by the taxes paid by gaming related job growth. The combination of these dollars-more than $100 million-supports our social service programs, our Police Department, our Fire Department as well as other essential City services.
Finally, over the next five years, the Philadelphia School District will receive $25 million from casino host fees. As recent reports on school finances have made abundantly clear, our public schools are facing staggering deficits over the next five years. Every dollar of support is critical.
If the Charter Change Referendum is enacted, the City Risks Losing all Control. The loss of local control over the location of these facilities is significant. The City lobbied aggressively for the right to designate where gaming would occur in Philadelphia, but did not prevail. Instead, the General Assembly enacted legislation creating the Gaming Control Board, delegating to the GCB exclusively the right to select sites where gaming can occur and license the casino operators.
The proposed Charter Amendment, if enacted, will not prohibit gaming in Philadelphia nor move the location of the gaming facilities, since state law clearly preempts any local legislation in the area of gaming. The City Solicitor has said this Bill is illegal, because the City does not have the legal authority to either prohibit or authorize gaming within the City.
In addition to its clear illegality, I have disapproved this Bill because I believe the proposed Charter Change Referendum, if enacted, will encourage the General Assembly to revoke the authority the City retains over the development of the proposed gaming sites. We cannot allow this to happen. This is not to dismiss or minimize the challenges casinos pose. Without the construction of an additional exit ramp off Interstate 95, Phase I of casino development, will negatively impact the residents and businesses in adjacent neighborhoods along South Delaware Avenue. Even the casino operator's own traffic study proposes a traffic management strategy that only addresses the impact from the development of Phase I. Concerns about additional crime, traffic, and parking in neighborhoods are real and raised in good faith. Clearly, we must appropriately address the concerns of these communities in addition to protecting the City's other interests.
The City is Working Aggressively to Protect Local Interests. The City now is engaged in negotiations with casino developers over critically important issues:
* after school programs
* public access to the waterfront at each casino site
* environmentally designed, energy efficient facilities (LEED Certified)
* improvements to local storm water infrastructure serving adjacent neighborhoods
* the elimination of casino tax abatements
* crime prevention programs and more police on the streets in the area of the gaming facilities
* jobs for City residents
* improvements on neighborhood roads
* minority Participation Goals
* special services districts that would be controlled by the citizens living in the vicinity of the casinos that would provide money and resources for improvements in the neighborhoods
To the extent that this Bill serves to prevent the implementation of the state gaming act, the state may act to eliminate the current authority we have under state law and our Home Rule Charter. Without this process, the incentive for gaming operators to address City concerns will be greatly diminished. The work to date on addressing the impacts of gaming will no longer be relevant to the approval of gaming facilities. The result would be gaming establishments that are less responsive to local conditions, operating for years to come in ways that will be less accountable to the community.
For these reasons, I urge you to sustain my veto of this Bill.
Sincerely,
John F. Street
Mayor
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