The 76ers indicate they may give more than $50 million for the arena proposal’s community benefits agreement

The 76ers are negotiating with City Council President Kenyatta Johnson’s office about potentially paying more than $50 million for the community benefits agreement associated with the team’s proposal to build a new arena in Center City, David Gould, the team’s chief corporate affairs officer, said in a hearing Tuesday.

“We are in conversations with the Council president about the overall CBA number,” Gould said in a meeting of the Committee of the Whole. “We are considering adjustment.”

Gould’s comments Tuesday were an indication the 76ers are willing to do what it takes to get the $1.3 billion project approved by Council before lawmakers adjourn for winter recess on Dec. 19. In hearings over the last three weeks, Council members have raised concerns about whether the agreement would adequately address community needs and protect neighboring Chinatown and the likelihood that the project will cost SEPTA millions in added operational costs.

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

The team had previously insisted on paying no more than $50 million toward the initiatives funded by the agreement, which was negotiated between the team and Mayor Cherelle L. Parker’s administration. The money would pay for aid to businesses affected by the arena’s construction, security measures around the facility, and other city priorities.

Negotiations between the team, Parker’s office, and Council members are in their final stages. The 76ers have said they need Council approval by the end of the year to meet their construction timeline, and Council has only three more regular meetings in 2024.

Tuesday’s hearing marked the second appearance in Council for Gould and Alex Kafenbaum, the team’s head of development. Three weeks ago, lawmakers grilled the pair on a wide array of issues, including the CBA, SEPTA funding, and why the team’s owners — Josh Harris, David Blitzer, and David Adelman — have not appeared in Council. The pair returned to Council on Tuesday in an attempt to clear up many of those concerns.

A preliminary vote to approve the arena could come as soon as Thursday morning. Council President Kenyatta Johnson has called for the Committee of the Whole, which includes all members, to meet at 8:30 a.m. that day, shortly before lawmakers are scheduled to meet for their regular weekly meeting.

A majority of Council members are expected to vote in favor of the project, given the support it enjoys from the building trades unions, widely viewed as the most potent force in Philly politics, and other powerful local constituencies. But given the high-profile opposition from Comcast Spectacor, the 76ers’ current landlord at the Wells Fargo Center, and advocates for Chinatown, which borders the proposed site, many lawmakers may feel they need political cover to vote in favor of it. Being able to say Council squeezed millions more out of the 76ers owners could go a long way.

Councilmember Mark Squilla, whose district includes the proposed site and who introduced the legislation, said that in order for the project to move forward, the 76ers would have to agree to pay at least $10 million more in the CBA, and that he is pushing for a higher number, which he declined to share.

“The minimum has to be another $10 million, if you want to be realistic, but I think we need more than that,” Squilla told reporters after Tuesday’s hearing. “I don’t think we as a body would support anything less than that, so there has to be some give.”

Squilla said the amount of money earmarked for helping nearby businesses affected by construction of the arena should increase from $1.6 million to at least $5 million. He also said the CBA should include money for a new $14 million special services district that would provide street-cleaning and public safety measures around the arena to be funded for 30 years instead of 20, as is currently the case. That could add as much as $7 million.

Resolving questions about the project’s impact on SEPTA, which is facing a financial crisis, won’t be as straightforward as negotiations over the CBA. The arena would be built atop Jefferson Station, and the 76ers have pledged to cover the costs of any physical changes to the important Regional Rail stop during the facility’s construction.

But SEPTA has said it could face more than $20 million per year in added operational costs once the arena opens in order to run the additional trains needed to serve 76ers fans.

Kafenbaum said the team is meeting weekly with SEPTA but is not budging on its insistence that it shouldn’t have to pay the transit agency’s operational costs, given that none of the other three major Philly sports teams pays for services to the sports complex in South Philadelphia.

“Our position remains that we are looking to be treated the same as the other teams,” Kafenbaum said.

SEPTA officials, however, have testified that the 76ers proposal is different, and more costly. The current sports facilities are at the end of the Broad Street Line, allowing SEPTA to stack subway cars that quickly ferry fans away after games end. The new arena would sit in the middle of the Regional Rail system, preventing stacking and requiring SEPTA to run more trains in the evening, when many lines are on hourly schedules.

Councilmember Rue Landau, who has been critical of the proposal, on Tuesday excoriated the team for requesting Council approval for the project by the end of the year when questions about SEPTA and other issues remain unresolved.

“This timeline is not fair,” Landau said in the hearing. “It is not respectful, it’s wrong, and we want answers to our questions.”

But supporters of the arena in Council have indicated they are likely to move forward even if SEPTA is not made whole. Squilla said two weeks ago he doesn’t believe the issue “is going to be a sticking point,” noting that the city does not require other developers whose projects add transit riders to fund SEPTA.

Another potential hurdle for the 76ers is its relationship with UNITE HERE, which represents concession workers at the South Philadelphia stadium complex and has questioned whether the project would provide family-sustaining jobs. Lawmakers have urged the team to reach a preliminary agreement with the union before the project gets a vote.

“That’s something that’s going to be essential to us being able to make a decision about moving forward,” Councilmember Cindy Bass said at Tuesday’s hearing. “It really should have been done at this point. It’s kind of late.”

“I believe we are very close,” Gould said.

Johnson added an extra session of Council for Dec. 19 to ensure the legislation needed to green-light the arena project could get a final vote by the end of the year. The 76ers have said that is their deadline for city approval in order to open the facility in time for the 2031-32 season, when the team’s lease at the Wells Fargo Center expires.

Under Council’s normal rules, the bills and resolutions would need to be voted out of committee before Council’s Dec. 12 meeting in order to meet that timeline.

Squilla has said it is likely he will propose amendments before moving forward with final votes. Those may include increasing the overall price tag of the community benefits agreement, altering how the funding within the agreement is distributed, and other changes.