School Board, Teachers Reach Tentative Contract Agreement

A tentative contract agreement was announced today between the West Chester Area Education Association and the WCASD School Board. The WCAEA and the School Board have been in negotiations for nearly two years, with the last contract having expired on June 30, 2012. Details regarding specific language changes offered by the School Board to the Teachers Association will not be made public until both sides have had the opportunity to discuss the terms internally.

In an attempt to resolve a negotiating impasse, both sides had agreed to enter a process in which the Pennsylvania Labor Relations Board appointed an independent fact finder to review pertinent data and issue a report with a suggested settlement. The School Board voted to accept the fact finder’s recommendations on September 9, 2013, while the Teachers Association voted to reject the findings. Both sides then agreed to further negotiations which resulted in the tentative agreement.

In separate statements, School Board President Vince Murphy and Teachers Association President Debbie Fell each expressed cautious optimism about reaching an agreement.

School Board President Vince Murphy said, “After two years of extremely difficult negotiations on issues that ranged from health care reimbursements, to salary ranges, to tuition reimbursements I’m very pleased that we have reached a tentative agreement on a contract that is both fair to taxpayers as well as the teachers in our district. The Board has moved beyond the recommendations made in the fact finder’s report and has addressed several concerns brought forth by the teachers association. The Board is pleased to know that our Union leadership recognizes that we are operating in challenging economic times, and this deal creates a balance between living within our means while also compensating our talented staff for the important work they do.”

“This negotiation process has not been easy for anyone,” added Superintendent of Schools Dr. Jim Scanlon. “I am grateful for our entire school community that both sides have been able to reach a tentative agreement.”

Association President Debbie Fell said, “The teachers in this district continue to strive to keep the focus on our students. It was a very frustrating negotiation process and we are not done. We need to ensure that the School Board recognizes the value our teachers bring to this community and the WCASD. By reaching a tentative agreement, we take the first step in that mission, which is in everyone’s best interest especially our children.”

The Teachers Association is scheduled to vote October 1, 2013, on the contract’s ratification. If approved, the School Board will vote on the tentative agreement at a special meeting to be held on Tuesday, October 8th at 7:30pm, in the Spellman Administration Building.

Source: West Chester Patch

Judge Halts Demotion of 14 Recently Promoted Fire Officers

A Pennsylvania judge has halted the demotion of more than a dozen recently promoted Philadelphia Fire Department lieutenants and captains pending a court decision.

Five captains and nine fire lieutenants were set to lose their titles on Wednesday after being promoted over the summer following a legal fight with the City of Philadelphia, according to the firefighters union.

However, Court of Common Pleas Judge Ellen Ceisler issued an order Tuesday evening putting a stop to the demotions until Judge Leon Tucker, who oversaw the first legal decision, reviews the case.

The officers were given their new positions after the International Association of Firefighters and Paramedics Local 22 sued the city for stalling on a set of promotions. The union won the court case and the department promoted the officers based off of a pre-assigned promotions list.

However, the city appealed the decision, arguing that the fire commissioner should be allowed to make promotions at his discretion. An appellate court agreed and reversed the ruling on September 18.

During the appeal, the fire department administered a new round of promotion tests for the lieutenant and captain positions. Since the 14 officers had already been promoted, the union says, the department excluded them from consideration.

"It’s just not fair," said Local 22 rep Edward Marks. "There was a test that was given in early June and a new list has been posted from the lieutenant and captain’s test. And the fellas that are being demoted tomorrow weren’t eligible."

City officials dispute that claim. Mark McDonald, Mayor Michael Nutter's press secretary, says a number of the officers took the new test -- some didn't finish and others either failed or scored poorly.

McDonald says the personnel changes are being made to select the "best and brightest" for the captain and lieutenant positions.

The department is now using that new list of candidates to fill those 14 positions.

City officials said they told the union and those being promoted to be prepared to lose their jobs should the ruling be overturned.

"They had the right to take the test, they understood that this was all conditional from the beginning, so whatever they decided to do was up to their individual decision and the council, probably, that they received from their union," Deputy Mayor Everett Gillison said.

Union president Joe Schulle said his members were lied to and told there would not be demotions.

"I will tell you that the commissioner lied and our human resources director lied and anybody else involved in the process that told our members that they were not going to be demoted, that this would be in bad taste. That this is not likely to happen," he said.

The union says the department has since changed the testing requirements for the officer positions and those who may be demoted would have to wait a year to apply for the jobs once again.

A hearing on the issue is scheduled for 1:30 p.m. on Wednesday.

Source: NBC10.com

Building collapse: Detailed report coming today

PHILADELPHIA (AP) - Philadelphia City Council members hope to make it tougher to get a demolition permit in the wake of a fatal building collapse.

Private building owners currently don't have to file demolition plans, or prove their workers are qualified or their taxes paid, to get a permit.

Council has held a series of hearings in the wake of a June 5 building collapse, when six people died inside a Salvation Army store because of demolition underway next store.

But in the wake of a criminal grand jury investigation, council did not explore what went wrong at that site.

Nonetheless, Councilman James Kenney says demolition contractor Griffin Campbell did not pay workers compensation or unemployment taxes, and did the job on the cheap.

His subcontractor is charged with involuntary manslaughter.

Source: abc27.com

CBRE Group buys retail real estate brokerage

CBRE Group Inc. has made a big, local retail play and bought Fameco, a regional firm formed in 1992 by Brandon Famous and Jeffrey Cohen.

Terms of the transaction weren’t disclosed. The company will go under the name CBRE | Fameco.

The deal bolsters CBRE’s strength in the retail real estate sector. The transaction gives the firm: 250 shopping centers and retail properties; 20 million square feet to lease; 20 million square feet of property management; and 75 retailers to its tenant roster.

Fameco’s 100 employees will join CBRE and, for now, CBRE | Famco will continue to be based out of Conshohocken, Pa. In all, CBRE will have nine offices throughout the region with the three Fameco locations folded in.

The deal was a deliberate effort by CBRE to gain a stronger retail foothold.

“We are the global leader in real estate services and the leader in the Philadelphia region but candidly, there was a gap in our service line,” said Robert W. Walters, executive managing director of CBRE’s Philadelphia office. “In our mind, clients more and more are looking to work with fewer and fewer service providers and are looking for firms that have a platform and resources across the board to help them. We think this is going to be extremely beneficial to our employees and our clients throughout the tri-state area.”

The deal aims to also help Fameco’s clients that can see some benefits from CBRE’s resources, Walters said.

Famous and Cohen, who will continue on with the firm, weren’t available for comment. However, Walters said that he has had casual conversations on and off with Fameco partners over the years about merging but those talks didn’t get serious until the last few months.

“The timing was right,” he said. “From our standpoint, when we look around at our business and we think about how can we grow not just for the sake of getting bigger and growing but where are the opportunities for CB to grow and what are our clients looking for in a service provider. There was a gap and we wanted to change that.”

Source: Philadelphia Business Journal

Convention Center: Pa. delays SMG approval; CEO says she'll be gone

The Pennsylvania Convention Center isn't going to make the board's Oct. 1 target date for replacing CEO Ameenah Young's adminstration with Conshohocken-based SMG's new team -- there's a lot of state paperwork to resolve, for one thing -- but SMG is already recruiting Young aides -- those who haven't left, there are at least 21 vacancies on the staff of 100.

Young, who's been at the North Broad St. venue, on and off, for 25 years, says she's not expecting to get an offer. Even when hires are decided, tough bargaining remains: Labor union contracts have been extended into next year. SMG hopes to ease set-up rules so small vendors, at least, can do more of their own work cheap.

When will the state, whose taxpayers still owe more than $700 million for the center, sign off on the deal? Maybe sometime in October, as the Corbett administration and board members hope. Or maybe they'll wait until the quarter ends Dec. 31, as some Harrisburg bureaucrats privately would prefer. But won't delay complicate efforts to bring in more shows so hotel rooms don't go vacant over the next few years?

Source: Philly.com

Lombardo heading national Transport Workers Union

Harry Lombardo wishes he could claim credit for one of the more aggravating - or interesting, depending on one's view - pieces of union street theater in Philadelphia labor history.

Actually, it was highway theater.

"Nobody will believe me," said Lombardo, 64, a former SEPTA bus cleaner, who rose through union ranks and has become, as of Wednesday, the national leader of the Transport Workers Union.

Lombardo led TWU Local 234 during a 14-day strike in 1995 against SEPTA. At one point, union members, who had been at a rally in Norristown, were arrested for blocking traffic by driving 20 m.p.h. on the Schuylkill Expressway.

The police, Lombardo recalled, cordoned off the streets so that all the members leaving the rally had to get on the expressway.

The police "created a traffic problem to begin with. Some members took it upon themselves to drive cautiously," Lombardo said. "Believe me, it was not planned. But when we see an opportunity to stick you, we stick you."

Lombardo, of Melrose Park, was elected international president at the union's convention in Las Vegas after a tough rivalry collapsed in the final days leading up to the meeting.

Lombardo replaced James C. Little, who headed the union since 2006.

In Philadelphia, Lombardo is best known for the 1995 strike.

"He was a very able guy," Louis J. Gambaccini, SEPTA's general manager at the time, said Wednesday. "I found him good to work with. He was a man of his word. He was reasonable . . . by no means did he cave. Yet he was tough."

Lombardo takes the helm of the TWU - which in 2012 represented 115,902 aviation and public transit workers - at a critical time.

The union has thrown its support behind the merger of US Airways, which has major operations in Philadelphia, and American Airlines. TWU represents 20,000 ground workers at American. If the merger goes through, TWU workers stand to gain a significant raise. The U.S. Department of Justice has filed a lawsuit to block the merger.

"Once again, our members are caught in the middle," Lombardo said Wednesday. TWU workers had completed contract negotiations with the combined entity.

Lombardo said the union continues to believe that increased business from the combined airlines would help offset an inevitable loss of mechanics' jobs at American, which will soon add new planes, all under manufacturers' warranty and less likely to need repairs.

First on his agenda, he said, will be a restructuring of the union itself, which is spending more than the $44.8 million in revenue it had in 2012. "There will be downsizing, no doubt about that," he said.

He also plans, he said, to restore more power to local unions, decentralizing authority.

Lombardo, who has been executive vice president, the number-two position nationally, earned $253,627 in 2012 - $271,676 if expenses and other disbursements are added.

Lombardo said his campaign to lead the union has prevented him from focusing on the situation at SEPTA, where contract talks have opened.

But, he said, it doesn't surprise him that SEPTA recently announced potential draconian cuts in service.

"I'm certain we are going to hear a lot of doomsday scenarios," Lombardo said. "I'm also certain that, spending the number of years that I did in Philadelphia, SEPTA has a great deal of difficulty getting the level of funding they should get out of Harrisburg."

---

HARRY LOMBARDO

New title: International president, Transport Workers Union.

Commute: Drives or takes the train from Washington.

Weekends: Melrose Park, Montgomery County, or Ocean City, N.J.

Diploma: Cardinal Dougherty High School.

SEPTA job: Bus cleaner.

Cleaning tip: "At least every three months,

I clean."

Books: "I just read silly novels."

Source: Philly.com

Employee Manual Update – Beware of Overly Broad Polices: Employers Arbitration policy found to violate section 7 of the Act.

Mastec Services, 16-CA-86102

How many of us have Employee Manuals that have a clause similar to this contained within:  “This Policy applies to any dispute arising out of or related to Employee's employment with the Company or termination of employment. Except as it otherwise provides, this Policy requires all such disputes that have not otherwise been resolved to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial. Such disputes include, without limitation, disputes arising out of or relating to interpretation or application of this Policy…..

I understand that my employment with “Employer” is at-will…..,

I further acknowledge that the Handbook contains a Dispute Resolution Policy… (With Opt-Out Policy)

It’s time to take a good look at our organization’s Employee Manuals and make the necessary revisions to assure their compliance with our current statures.

In Mastec Services Company (Employer), Inc., 16-CA-86102 (June 3, 2013), the employer’s Dispute Resolution Policy along with its accompanying Employee Acknowledgment were found to violate Section 8(a)(1) of the Act.

The Employer was found to have maintained and enforced an employee handbook establishing terms and conditions of employment requiring employees to resolve all employment related disputes by individual arbitration and forego any rights that they had to resolution of employment-related disputes by collective or class action. Additionally, the Complaint also alleged that the Employer required employees to sign an employee handbook acknowledgement form providing that employees would be bound to the Arbitration Policy described above, unless they opt out of the policy within 30 days of receiving the employee handbook.

The Dispute Resolution Policy specifically prohibited class or collective actions and actions on behalf of a class of persons or the general public, and prohibited the parties and the arbitrator from disclosing the existence, content or results of the arbitration without the prior consent of all parties to the arbitration. The policy and the Acknowledgement indicated that employees must choose whether to accept or opt-out of the policy, but in order to opt out, they had to do so, in writing, within 30 days of receipt of the handbook setting forth the policy.

The employer argued, this was not a mandatory prohibition as the Employee “had the right to opt out of the Policy within thirty days of his receipt of the Employee Handbook and, thereby, could have maintained the right to pursue claims in court- whether as an individual litigant or as a participant in a class or collective action [emphasis supplied] –if he so chose.”

The Judge ruled that the Dispute Resolution Policy, even with the opt out provision, violated Section 8(a)(1) of the Act. 

The Board has long held that concerted legal action addressing wages, hours and

working conditions, whether in a courtroom setting, before an administrative agency, or through arbitration, represents protected concerted activities under Section 7 of the Act.

The Act grants to employees the right to engage in protected concerted activities without interference by his/her employer. As these rights are granted by the Act, an employer may not lawfully require its employees to affirmatively act (opt out, in writing, within thirty days of receipt of the Employee Handbook) in order to obtain or maintain these rights.

Additionally, employees who did opt out were unable to cooperate and engage in concerted activities with those employees who did not opt out; they cannot engage in class actions with them and, pursuant to the terms of the Policy, they cannot learn of the existence, content or results of prior arbitrations that the non-opt out employees were involved in. This would clearly put them at a disadvantage in their attempts to engage in concerted actions.

Finally, the Judge found that some employees might be reluctant to exercise the opt out option for fear of angering their employer. Opting out required the employee to obtain a Dispute Resolution Policy Opt Out form from the Employer’s Legal Department, and signing and returning it to the Legal Department within thirty days of receipt of the policy.

Counsel for the Employer argued that the opt-out procedure provides that the employee obtain the opt-out forms from the Employer’s legal department and return it to the same department, rather than his/her supervisor or manager; therefore, the supervisors and managers would not know which employees elected to opt-out. Further, the next to final paragraph of the Policy states that employees choosing to exercise their right to opt-out will not be subject to any adverse employment action for doing so.

Ultimately, the Judge ruled that the Respondent’s Dispute Resolution Policy violated Section 8(a)(1) of the Act.

The takeaway for employers:

As we have learned in several recent NLRB cases, overly broad policies that appear to restrict an employee’s right to engage in concreted activities should be avoided.

Opt out and Saving Clauses simply are not an acceptable Employer argument in the et s of the NLRB.

Make the necessary revisions to your Employee Manuals to avoid these potential pitfalls in the future.

The Case information can be found on the NLRB’s website here…

The Administrative Law Judge’s Decision can be found on the NLRB’s website here…

These views and opinions are personal and based upon the facts and information as it has been presented to me.  I am not an attorney and do not represent myself as one.  I always recommend that employers and employees seek appropriate legal counsel with matters such as these to further limit the potential liability to you and your organization.  

Business, labor leaders urge House to pass $2.5B transportation bill

Sept. 24--HARRISBURG -- Business and labor groups on Tuesday urged the state House to swiftly approve a Senate-passed bill to provide $2.5 billion for transportation needs, saying the investment would keep Pennsylvania competitive.

The joining of interests that often battle each other was so unusual that Pat Gillespie, business manager of the Philadelphia Building and Construction Trades Council, told reporters at a news conference: "I'm uncomfortable up here with all these bosses (on stage)."

The Allegheny Conference on Community Development joined the groups to push for House passage of the bill that would lift the wholesale cap on gasoline taxes and likely raise prices at the pump. Critics call it a tax hike.

"We can't afford to wait any longer. We're getting to the point where inaction is going to discourage businesses from expanding and locating in the Pittsburgh region," said Dennis Yablonsky, CEO of the Allegheny Conference.

House Majority Leader Mike Turzai, R-Bradford Woods, who opposes the bill, said he intends to call a vote. Asked whether that's an effort to demonstrate that the bill can't win House support, Rob Wonderling, CEO of the Greater Philadelphia Chamber of Commerce, said: "I take the (majority) leader at his word."

House Republicans intended to discuss it behind closed doors, said House GOP spokesman Stephen Miskin.

The Senate overwhelmingly approved the bill in June but it failed to garner enough support before the House recessed for summer. The fall session opened on Monday.

"It's time to fund transportation and transit and keep our region -- and the whole state -- competitive," said Yablonsky.

Inaction, he said, would hurt transit not only in Philadelphia and Pittsburgh but in 67 counties. Transportation is "a core function of government," he said.

"God help us if we don't do this and something happens," said Auditor General Eugene DePasquale, a Democrat. The cost of fixing roads and bridges would double if lawmakers don't act now, DePasquale said, because such a bill would become off-limits in 2014, an election year.

Allegheny County Executive Rich Fitzgerald said failing to act would mean "we're putting at risk job creation and young people moving to Allegheny County."

Despite what some people think, the bill isn't controversial, said Wonderling.

"It's routine. It happens every 10 years or so," he said.

Source: Pittsburgh Tribune-Review / American Planning Association

Hedging bets: The city weighs in on bidders for second casino license

MAYOR NUTTER'S staff told the state Gaming Control Board yesterday that it will not take a position on who should win the city's second casino license.

But Deputy Mayor Alan Greenberger made it clear that the city prefers two bidders who want to locate in Center City rather than three bidders near the sports stadiums in South Philly.

The sixth bidder, casino developer Steve Wynn's project in Fishtown, prompted concerns that the city has about the potential impact on the nearby SugarHouse casino.

Greenberger, testifying in a hearing where only the administration's input was considered, said the South Philly proposals were less likely to spur economic growth in the surrounding area.

The city weighed that as a factor, along with community impact, job creation, security, traffic congestion and participation by minority and female contractors.

Here are the pros and cons outlined by the city to the gaming board:

* Market8 - The city likes the impact this proposal at 8th and Market streets could have on redeveloping an area of Center City that has had problems for years.

The location is near several types of mass transit, but the city said traffic problems are "inevitable" without major work, and it worries about security for patrons at off-site parking.

* The Provence - The city said this proposal at Broad and Callowhill streets has the best potential for jobs and taxes while also helping in the redevelopment of the surrounding neighborhood.

But the project sits in an already congested traffic area that needs to be addressed by the bidder, the city and the state.

Greenberger said Market8 and The Provence "have the greatest potential to spur additional economic benefit," with Market8 having the "most immediate effect," and The Provence a "longer-term revitalization."

* Wynn Philadelphia - The city said Wynn has a successful casino brand that could draw new visitors to the area and help redevelop the riverfront.

But the city worries about the impact on SugarHouse, just a mile south of the project's proposed site. It said a "cohesive plan" between the two casinos would allay those concerns, essentially requiring Wynn to cooperate with SugarHouse.

* Live! Hotel and Casino - This bidder at 9th Street and Packer Avenue had the best reception from the city for a South Philly proposal, with an experienced operator who already runs Xfinity Live! nearby.

The city's chief concern is that the proposal "performs poorly" on job creation, casino taxes and non-gaming business.

* Hollywood Casino - This bid at 7th Street and Packer Avenue also has an experienced bidder, who is proposing to funnel profits to a nonprofit that would help fund the city's school district and pension fund.

The city said it wants a "clearer understanding of exactly what the financial commitment - not projection - would be over the long term" from the nonprofit.

* Casino Revolution - The city said this proposal at Front Street and Pattison Avenue has a large site in an isolated section that would reduce the impact on the surrounding neighborhoods.

But the proposal is unlikely to draw a new audience or expand the number of people who visit the city for casino gambling, the city said, adding that the area was better suited for industrial uses than recreation.

Yesterday's hearing was interrupted for five minutes while a group of about 25 anti-casino protesters chanted and waved signs.

The Gaming Control Board will accept written comments about the bidders until Nov. 29. It will hold final suitability hearings on the bids in Philadelphia on Jan. 28, 29 and 30.

Source: Philly.com

(CORRECTED LINK):Analysis of Philadelphia Development Costs:

To my commercial construction clients and facility owners in Philadelphia, here is the much talked about Econsult presentation on development cost in Philadelphia.  I have to admit, I expected a bit more detail after the ULI meeting last week and the follow-up Philly.com article.

Click for the EConsult ULI Presentation

Mother Bethel members pray for historic foresight over apartment proposal

THE PHILADELPHIA Historical Commission didn't heed its own architectural committee when it voted to approve plans to use gray stucco for a proposed apartment building across the street from the historic Mother Bethel AME Church in Society Hill.

So last night, church members and neighbors, including members of the Society Hill Civic Association, took their protest to a higher authority.

Outside the church at 6th and Lombard streets, Mother Bethel's pastor, the Rev. Mark Tyler, led a prayer vigil asking that the commission follow the right path toward historical integrity.

"Some of our members prayed that the commission will exercise better judgment and reverse its decision," Tyler said.

The apartment building is planned for what is now a parking lot at 6th and Addison. In general, residents assert the building's gray brick-and-stucco design, including large bay windows that overhang the sidewalk, clashes with the historic, redbrick character of the area.

"It's an historical district," said Lorna Katz-Lawson, an architect who chairs the Society Hill Civic Association's Zoning and Historical Preservation Committee. "The whole point of having an historic district is to have a certain support for respecting scale and feel of the buildings around you."

Mother Bethel African Methodist Episcopal Church was founded in 1793 after Bishop Richard Allen bought the land for the church in 1791.

Tyler conceded that the building's design is attractive.

"It looks like something you would see in Aspen at a ski lodge, or one of the other areas in Philadelphia that have been gentrified with more modern buildings," he said. "But it doesn't fit in with the historic character of the community. It would be a beautiful building somewhere else. But it's hideous where they want to put it."

Records show that property owners Pamela Ying Jin and James Nga Kuk Li want to build the four-story, six-unit apartment building.

The project's architect, Stephan Potts, said the project hews to the commission's guidelines, noting that new buildings "should not attempt to create a false sense of history by building something new that appears to belong to another period."

Jonathan Farham, the commission's executive director, wrote in an email:

"The Architectural Committee offers nonbinding, advisory recommendations. The Commission is free to accept or reject those recommendations. . . . In this case, the Committee recommended denial of the original design, but also offered suggestions to the architect for improving that design. The architect implemented those suggestions and the revised design was presented to the Historical Commission. Therefore, the design that Committee reviewed and rejected was not the design that the Commission reviewed and approved."

Residents say the changes were minimal.

Larry Spector, who has lived in the neighborhood for 28 years, testified at the commission's Aug. 9 meeting that the new building's rooftop air-conditioning compressors "face right into the stained-glass windows of Mother Bethel Church."

"It's just not right," he said.

Source: Philly.com

Philly outlines pros, cons of casino proposals

Any of the six applicants for Philadelphia's second casino would be "a viable option," but all of the proposals also face obstacles, city officials and consultants say.

Alan Greenberger, the city's deputy mayor for economic development, and consultants from AKRF spoke this morning before the Pennsylvania Gaming Control Board, which will award the casino license.

Greenberger said the city was not endorsing any of the proposals, but had reviewed the benefits and drawbacks of each. Still, he noted that the three South Philadelphia proposals appear unlikely to differentiate themselves from SugarHouse, the city's existing casino, while Center City projects are expected to spur development.

"Any one of the six proposals is a viable option," he told the board members. "We have not identified any issue with a particular proposal which should rule it out of contention."

During the hour-and-a-half-long hearing, Greenberger and the consultants, which conducted an economic analysis for the city, described the potential economic impact of the plans, as well as their effect on the surrounding communities and SugarHouse.

Three contenders would build their casinos in South Philadelphia's stadium district: Casino Revolution, planned by "Tomato King" Joseph Procacci and his PHL Local Gaming; Hollywood Casino, planned by the Berks County-based Penn National Gaming; and Live! Hotel & Casino, planned by Parx Casino owner Greenwood Racing and Xfinity Live! operator Cordish Companies.

Others vying for the license are: Las Vegas casino magnate Steve Wynn, whose proposed Wynn Philadelphia would be located in Fishtown; developer Bart Blatstein, whose planned Provence would be in the former home of the Philadelphia Inquirer, Daily News and Philly.com on North Broad Street; and developer Ken Goldenberg and his Market East Associates, whose proposed Market8 casino would be at Eighth and Market streets.

Greenberger said the three South Philadelphia proposals are "less likely to induce further development and less likely to generate a new audience" than other projects.

He said the three sites have good highway access, but that could lead to congestion, especially during sporting events. 

Hollywood, particularly, "performs relatively poorly" in terms of generating jobs and tax revenues, Greenberger said.

He also questioned whether some of the South Philadelphia plans would enhance the city's gaming offerings. Casino Revolution "does not deliver anything that does not already exist," he said.

Greenberger also noted that the sites may be too far from the Broad Street Line for pedestrian access, but the "relatively isolated" location for Casino Revolution means the impact on residents would be "relatively minimal."

But Live! and Hollywood would be run by experienced casino operators, and Live! especially could help create "a more dynamic sports and entertainment district."

AKRF consultant John Neill noted that the stadiums draw visitors that area year-round, which could help bring steady traffic to the casinos.

The Center City sites -- Market8 and the Provence -- "have the greatest potential to spur additional economic development," Greenberger said.

Market8, Greenberger told the board, would have the "most immediate effect," while the Provence would be "part of a longer-term revitalization of North Broad Street."

Some of the city's biggest concerns with Market8 deal with security, parking and traffic, he said. And residents of nearby Chinatown have expressed worries about problem gambling.

Still, the Market8 proposal is at a "prime site" that could enhance efforts "to rejuvenate Market Street East," he said.

The Provence could complement a "wide range of existing investments," such as the Convention Center expansion, and would be a "major investment" along a "priority corridor," Greenberger said.

The Provence also would bring the largest potential benefit in jobs, gaming and non-gaming revenue and tax revenue, he said.

But, Greenberger noted that the casino would be located at the "already congested" interchange near Vine Street, 15th Street and 16th Street.

Wynn's project is the closest to SugarHouse, which is also located along the Delaware River.

There is a concern about "potential overlap" with SugarHouse, Greenberger said.

But, he added, that a Wynn casino could be "an attraction in its own right" and bring new visitors to the city. And Neill told the board that pairing the casinos in close proximity could offer a "critical mass" to draw gaming customer to the region.

The hearing was briefly interrupted when a group of anti-casino protesters began chanting. The group held signs saying "crime," "addiction," and "poverty," and were escorted out of the hearing room by security.

"No casinos, no matter where," the protesters yelled.

The gaming control board said today that it has extended the time for the public to submit comments on the proposals, to Nov. 29.

The board also scheduled the final hearings on the casino, which will concern the suitability of the applicants to hold a license. Those hearings are scheduled for Jan. 28-30, 2014, and will be held in Philadelphia.

Source: Philly.com

Hersha sells 16 hotels for $217M

Hersha Hospitality Trust, which owns 64 hotels primarily in the Northeast, has an agreement to sell 16 of them, including seven in suburban Philadelphia, New Jersey and Delaware, to an affiliate of Blackstone Real Estate Advisors for $217 million.

The hotels, which include the Marriott and Holiday Inn brands, will remain hotels under the new owners, said Pete Majeski, Hersha's manager of investor relations and finance.

Hersha Hospitality, a real estate investment trust in the hospitality industry, is based in Harrisburg with corporate offices in Philadelphia. It owns the upscale Rittenhouse Hotel on Rittenhouse Square and the Hampton Inn in Center City across from the Pennsylvania Convention Center.

Since 2008, the company has sold 46 "non-strategic" hotels for about $460 million.

"This flexibility has been an advantage for the company's ongoing portfolio recycling strategy," Hersha said Tuesday on its website.

Jay H. Shah, Hersha chief executive officer, said the sale, which is anticipated to close by March 31, "completes our transformation into a pure play, urban transient portfolio" in "some of the highest demand gateway markets in the United States."

The company said it plans to use proceeds from the sale for "higher growth opportunities in Miami and the West Coast."

The hotels that are being sold include a Courtyard by Marriott and Residence Inn in Langhorne; Holiday Inn Express in Oxford Valley; Courtyard by Marriott in Princeton; Holiday Inn Express & Suites in King of Prussia, and Courtyard by Marriott and Inn at Wilmington, both in Wilmington.

The company also is selling TownePlace Suites in Harrisburg; Holiday Inn Express and Hampton Inn in Hershey and Residence Inn in Carlisle.

Blackstone Real Estate Advisors in New York is the investment arm of the Blackstone Group specializing in real estate investing.

Source: Philly.com

City favors downtown casino proposals

Philadelphia city officials praised two Center City casino proposals for the potential they have to reinvigorate downtown.

The proposals — the Provence proposal for the old Philadelphia Inquirer building on Broad Street and the Market8 plan for the 800 block of Market Street — were cited for their potential to attract a new audience and spur economic development while, at the same, not taking business from existing area casinos.

“If it’s done well, [Market8] could have a rejuvenative effect on a block that’s been bad for three decades,” said Alan Greenberger, deputy mayor for economic development. “It could attract a new audience with no negative impact on other casinos.”

The Provence, which would have a casino and substantial retail component, would have the greatest revenue potential on both the gaming and non-gaming side, the city said.

He made the city’s case at a hearing before the Pennsylvania Gaming Control Board. The hearing, held at the Pennsylvania Convention Center, weighed out the pros and cons of the six casino proposals. Only one plan will be chosen.

A third proposal, for a Wynn casino on North Delaware Avenue, drew the city’s praise for its potential for redeveloping the Delaware River waterfront.

“It could have a powerful transformation of the waterfront. There’s the power of the Wynn brand, that’s not to be taken for granted,” Greenberger said. “But we’re not sure how it fits into the city.”

Wynn and the Provence would both drive job growth, while the Provence would provide the most revenue on both the gaming and non-gaming side, the city officials said.

All six proposals are viable, Greenberger said, adding that none “can be ruled out.”

However, Greenberger expressed concerns about the three South Philadelphia proposals:

Casino Revolution, which he said was “isolated” and “unlikely to appeal to a new audience”

Penn Gaming’s Hollywood Casino, which because of its proximity to the stadiums, raised a “significant concern” over game-day traffic

The Cordish-Greenwood proposal for Live! Hotel & Casino, which again raised traffic issues.

Greenberger also cited the city’s disappointment with Cordish’s XFinity Live!, whose “quality [is] less than originally proposed.”

The city’s assessment was aided by a Mount Laurel, N.J., consulting firm, AKRF.

After the hearing, Bruce Crawley, spokesman for Casino Revolution, balked at the characterization that the casino would be isolated. He said the ownership group will continue to hone its proposal.

“We think we focused on what the city wanted. We have great relations with the neighborhoods. If you look at other casinos, they don’t have neighborhoods next door,” Crawley said. “We think we’d have the greatest impact. Along with Wynn, we’re the only one that can go to 5,000 slots. We also have the early-open option, getting open in nine months from licensing, as opposed to 15 to 18 months.”

Bart Blatstein, a principal behind the Provence project, said he’ll continue to refine his proposal.

“I always feel like we have work to be done. We’re never satisfied,” Blatstein said. “We’ve gone to more than 40 neighborhood meetings.”

Ken Goldenberg, a partner in the Market8 proposal, said despite the city’s apparent praise of the Provence and Market8 projects, “they are very different from one another.”

“Our project would create a zone between the Loews and Marriott down to the galleries of Old City. We’d have a $15 million rewards program for merchants. We wouldn’t have the retail [of the Provence], but the Gallery is our retail. Chinatown is our retail. The galleries on Second Street are our retail.”

Tuesday’s hearing was interrupted for upwards to 10 minutes while about 25 to 30 protesters chanted, “No casino ... No casino no matter where.” They carried signs saying “Addiction,” “Crime,” “Poverty.” Check out video here.

Protester Paul Boni held up a sign quoting a 2007 campaign promise from Mayor Michael Nutter vowing not to use casinos for economic development.

Another protester, Ellen Somekawa, was the first to launch into a protest chant during the hearing.

She and other proesters were escorted out by police. Outside the hearing room, she said the No Casino in our City Coalition is made up of 10 smaller organizations. They oppose all casino development.

“Enough,” she said. “The city has enough already.”

Source: Philadelphia Business Journal

Equitable Exception To Excuse Interim Withdrawal Liability Payments Rejected

A federal district court in New Jersey recently declined to apply an equitable exception to excuse an employer’s failure to pay interim withdrawal liability payments while it challenged the demand for withdrawal liability. Nat’l Integrated Grp. Pension Plan v. Black Millwork Co., 2:11-cv-05072-KM-MAH (D.N.J. August 1, 2013). After making one withdrawal liability payment, the employer initiated arbitration to challenge the plan’s demand for withdrawal liability and made no further payments. Notwithstanding ERISA’s “pay now, dispute later” statutory withdrawal liability rules, the employer argued that the court should apply an equitable exception to this mandate. In particular, the employer argued that the court should invoke, like the Fifth and Seventh Circuits have done, equity to excuse an employer’s failure to pay interim withdrawal liability when an employer could show: (i) severe financial hardship, and (ii) the fund’s claim is frivolous and not colorable. The district court, observing that the Third Circuit had previously expressed skepticism regarding whether a court could apply such an equitable exception, concluded that even if the Third Circuit were to adopt such an equitable exception, the employer had not shown that the plan’s claim was frivolous.

Source: ERISA Practice Center

Withdrawal Liability From Multiemployer Plan and Alter-Ego Liability.

Because of the severe underfunding in many multiemployer defined benefit funds, we are seeing increased collection activities by these funds to collect withdrawal liability. In many situations, the direct contributing employer is unable to pay withdrawal liability. Therefore, multiemployer funds look for other entities that could be liable for such payments. One theory that funds have been pursuing is to claim that other entities are “alter-egos” of the withdrawing employer and thus are liable to the fund. As two recent cases illustrate, this theory is very fact-specific; sometimes funds are successful and other times they are not.

In the first case in the U.S. District Court for the Northern District of Ohio, (Local 134 Board of Trustees of the Toledo Roofers Pension Plan v. Enterprise Roofing & Sheet Metal, N.D. Ohio, 2013), the district court found that a related company was an alter-ego. Enterprise Roofing and Sheet Metal (Enterprise) participated in a multiemployer plan and, when it ceased operations, it was subject to withdrawal liability of slightly more than $600,000. Enterprise did not pay the withdrawal liability, and the fund sought payment from an entity owned by family members. Enterprise was a family-owned business and was the party to a collective bargaining agreement. The second company, which had a similar name, Enterprise Roofing and Remodeling Services Inc. (Newco), and was non-union, was founded when the president of Enterprise realized that Enterprise would probably fail financially. The president’s wife, who had no experience in the business field, incorporated Newco. The president helped his wife run the company, used the same attorney to form the new company, and two employees from Enterprise served as Newco managers. The president, upon divorcing his wife, received all the shares of the new company. Over the period of operation, there was a substantial overlap in management, shared business facilities and equipment, and shared customers between the two companies. It was also found that there was extensive lending of money between the two companies with no intention to repay. The district court found that the new company was formed to avoid the burden of Enterprise’s collective bargaining agreement with the union and, therefore, was liable as an alter-ego.

The second case, in the U.S. District Court for the District of Columbia (Boland v. Thermal Specialties Inc., D.D.C., 2013), Thermal Specialties Inc. (TSI) operated for more than 30 years and participated in a multiemployer defined benefit plan. In 2009, one of TSI’s former employees purchased all the assets of TSI, and TSI closed. The new company (Newco) encouraged the employees of TSI to apply for work with Newco with the caution that benefits and terms of employment would be changed. The union filed a charge with the National Labor Relations Board (NLRB) alleging that Newco was an alter-ego of TSI. The NLRB dismissed the charge. Subsequently, the fund trustees sued TSI and Newco, claiming them to be jointly and severally liable for deficient pension contributions to the multiemployer plan. The district court found that many of the elements necessary to impose alter-ego liability were present because there was some substantial overlapping of management and business purpose operations and customers. However, the district court did not find the companies were alter-egos because it found they are not essentially the same company. The district court found that the purchase was sufficiently an arm’s length transaction with no record of “flim-flammery,” citing that the negotiations for the purchase were arm’s length and that the court’s analysis follows that of the NLRB’s.

As these two cases illustrate, the application of the alter-ego theory is dependent on the factors that are present, and we can expect funds to raise the alter-ego claim more frequently in the current multiemployer plan environment.

Source: Hodgson Russ LLP

Region's newest hospital expanding its reach

Einstein Medical Center Montgomery, which will celebrates its one-year anniversary later this week, is already planning to expand its reach.

The East Norriton, Pa., hospital has just started work on an ambulatory-care center in Collegeville expected to open in March.

The 19,000-square-foot facility in the Providence Town Center will provide multi-specialty physician services and outpatient imaging while also serving as a site for a MossRehab satellite office. Additional space will be available for doctors to lease.

Einstein Medical Center Montgomery has an ambulatory-care center on its main campus [in an adjacent medical office building] that provides a variety of outpatient services. Beth Duffy, the hospital’s chief operating officer, said she’d like to see Einstein open other outpatient-care centers off its main campus over time. No such projects, however, are on the drawing board right now, she said.

The major project taking place at Einstein-Montgomery, part of the Philadelphia-based Einstein Healthcare Network, is a renovation that will add a 24-bed surgical monitored-care unit to the 146-bed hospital.

The project, expected to be completed in January, will also add another 45 permanent jobs at the hospital, which has about 1,000 full-time equivalent workers.

Duffy said the hospital was designed to be expanded based on community demand, and that demand has come sooner rather than later.

“It’s been an amazing year,” Duffy told me last week during an interview at the $350 million hospital. “It’s amazing how quickly it’s gone by. Everybody is so proud of what we’ve been able to accomplish. We’ve done a tremendous job here. I’m not patting myself on the back. It’s because of the 1,000 people who work here.”

Duffy said she had a good feeling the central Montgomery County residents were going to react positively to the new medical center when she saw how many people turned out for an open house Einstein held to show off the hospital.

They expected about 5,000 people to show up, but planned for 7,500 to 10,000 — just in case. More than 15,000 ended up attending.

“We couldn’t believe the line of people waiting to get in,” she said.

John Harris, a principal with the health-care consulting firm DGA Partners in Bala Cynwyd, said Einstein "recognized a good market opportunity" when it targeted central Montgomery County for a new hospital. "From the start, they had a solid plan and they executed it really well," Harris said.

Einstein-Montgomery was built as a replacement hospital for the former Montgomery Hospital Medical Center in neighboring Norristown.

Final numbers for the hospital's first year are not yet available. Annualized figures calculated from Einstein-Montgomery's first nine months show admissions at the new hospital — when compared to the previous year Montgomery Hospital Medical Center — are up 41 percent to a projected 8,965. Emergency department visits are up 19 percent to 36,291.

Duffy said the two areas where the patient numbers have climbed faster than projected are obstetrics and cardiology.

“The obstetrics program exploded from the very first day,” she said, noting the hospital expects to handle 1,625 births in its first year — a 67 percent increase compared to Montgomery Hospital Medical Center.

The hospital also has an eight-bed, level-III neonatal intensive-care unit. Montgomery Hospital Medical Center did not have a NICU.

Einstein-Montgomery also has a much more extensive cardiology program than its predecessor, which was only doing some cardiac catheterization procedures (used to diagnose and treat heart ailments) and did not have on-site, open-heart surgery.

The new hospital expects to perform 172 cardiothoracic surgeries in its first year and is on pace to do 1,126 cardiac catheterizations, which would be a 47 percent increase from those done at the Norristown hospital. Einstein-Montgomery also provides electrophysiology services for diagnosing and treating irregular heart beats, which was not done in Norristown.

Duffy said the medical center remains on track to meet its objective of operating in the black during its second fiscal year [which began July 1].

Not all the projects at the East Norriton hospital have centered on clinical services. The 21,500-square-foot Jane and Leonard Korman Family Healing Garden recently opened earlier this month in front of the hospital along Germantown Pike.

The Kormans, philanthropists from Fort Washington, Pa., whose family business in real estate, provided funding for the project.

Duffy described the walking garden, which has its own waterfall, as a “stress reducer” as well as a place people can go to sit and relax.

Source; Philadelphia Business Journal

Granite Run Mall's $122M failed road trip

We start to see some local fallout from the billions of Commercial Backed Securities that matured in 2006 and beyond.

The recent sale of the Granite Run Mall is a local example of the seemingly never-ending, head-pounding hangover that parts of the commercial real estate market continue to suffer from.

It stems from those reckless days when commercial mortgage brokers, like drunken sailors, took a shine to any piece of property that crossed their path, issued commercial mortgage backed securities (CMBS) loans on them and went on their merry way.

The loan on Granite Run was part of a $2.45 billion CMBS pool issued in 2006 by Deutsche Bank Securities and Banc of America Securities. The Granite Run loan was originally for $122 million, making it the fourth largest in that tranche, according to SEC documents filed by Deutsche.

That fourth largest loan wasn’t a particularly good investment. With the sale of the property to BET Investments Inc. for $24.3 million and a net outstanding balance of $128.3 million, the lender and those who bought pieces of the debt will be taking, basically, a 100 percent loss on their investment, according to Trepp data.

It can’t be fun driving along Baltimore Pike each day watching the mall lose tenants and value.

Here’s where Granite Run, and, let’s face it, Media, Pa., was a victim of those heady pre-recession days.

Simon Property Group and Macerich Group — two well-regarded real estate companies — bought the mall in 1998 as part of a joint venture that spent $974.5 million to buy 12 malls totaling 10.7 million square feet from the Equitable Life Assurance Society.

The CMBS loan was secured by 691,966 square feet of the 1 million-square-foot regional mall. Regular payments on the loan were being paid by the mall’s owners. However, the loan was placed in special servicing on Oct. 25, 2010, because the property wasn’t generating enough monthly profit to cover the debt service.

By spring 2011, the special servicer overseeing the loan took over the property from the partnership that owned it and named a new company to manage and lease up vacancies. The lender and the owners apparently couldn’t work out a deal to renegotiate terms on the loan and walked away.

In late 2012, an appraisal on the property slashed the value of Granite Run by more than $100 million and put the appraised value of Granite Run at a meager $27.6 million. Pitiful considering when the Simon-Macerich partnership bought it, the mall was valued at $155 million.

The property was eventually foreclosed upon and put up for sale. If there’s any good news in this, it’s the early vision by BET to transform it into something that will reinvigorate Granite Run and hopefully give Media something that will not only generate more tax revenues but something it can be proud of.

Source: Philadelphia Business Journal

Ninth Circuit Issues Decision on Multiemployer Plan Obligations

The defendant in this case was a sole proprietor of a carpentry business.  He chose to terminate his collective bargaining agreement with a trade, but continued to perform work within the jurisdiction of the agreement.  Specific only to the construction industry under ERISA, doing so triggered withdraw liability from the affected funds.  The funds audited and assessed the contractor $175,000.00 in withdraw liability as a result of his ongoing work within the jurisdiction of the agreement which triggered the event. 

The contractor filed for bankruptcy protection in an attempt to discharge the debt.  The Funds countered by claiming that the contractor was a fiduciary to the funds and that, under the “defalcation exception”, which prevents the discharge of a debt when the debtor was acting in the capacity of a fiduciary, the debt should not be discharged.

The 9^th Circuit Court of Appeals “reasoned that the withdrawal liability was a statutory obligation, and was different from unpaid contributions arising from contractual obligations under the collective bargaining agreement.”

The primary issue in this appeal is whether that “withdrawal liability” is dischargeable in bankruptcy.

The 9^th Circuit Court of Appeals states that answer requires some analysis of possible differences between withdrawal liability and liability for delinquent contributions.  They ultimately agreed with the result reached by both the bankruptcy court and the district court that the debt is dischargeable. The pension fund cannot establish that the debtor is a fiduciary with respect to money it owes as withdrawal liability.  The contractor had nothing to do with the fund’s administration or investment policy and did not exercise control respecting disposition of its assets upon withdraw from the collective bargaining agreement.

The district court held a debtor is not a fiduciary with respect to money he owes as withdrawal liability, because the Bankruptcy Code requires “a fiduciary relationship to exist before the bad act of nonpayment”, rather than as a result of it.  As the withdraw liability was triggered after the contractor withdrew from the collective bargaining agreement and thus, he was no longer bound to the terms and conditions of the agreement, he could not be held as a fiduciary of the fund.  As the fiduciary relationship ceased to exist upon legally withdrawing from a collective bargaining agreement, he could not be held as such after the fact.  As a result of his status, the debt was found to be dischargeable.

Key points worth noting:

·         This contractor had legally withdrawn from an existing collective bargaining agreement

·        The withdraw liability assessed was calculated and assessed for work performed within the jurisdiction and terms of the agreement prior to termination of the relationship. It was only assessed after the contractor had legally withdrew from the collective bargaining agreement.

·         The fiduciary relationship ceased to exist upon legally withdrawing from a collective bargaining agreement.

The Ninth Circuit’s Decision may be found here… 

These views and opinions are personal and based upon the facts and information as it has been presented to me.  I am not an attorney and do not present myself as one.  I always recommend that employers and employees seek appropriate legal counsel with matters such as these to further limit the potential liability to you and your organization.