PA: A new 76ers arena would cost SEPTA millions. City Council may approve it anyway, a key lawmaker said.

City Council may approve the 76ers' proposal to build an arena atop SEPTA's Jefferson Station even if the team does not agree to subsidize the beleaguered transit agency for the annual $21 million in extra costs it expects to incur once the arena opens, a key lawmaker said Thursday.

"I'm not sure that we are going to ask every developer who comes and would add more transit riders ... to pay for it because our goal is to get everybody on to public transit," said Councilmember Mark Squilla, whose district includes the proposed arena site and who introduced the legislation to authorize the project. "I don't think that particular operating cost is going to be a sticking point."

Funding for SEPTA has become a high-profile issue as Council considers the 76ers' plan to build the $1.3 billion arena, which would have a footprint from Market Street to Filbert Street and 10th Street to 11th Street.

Several lawmakers have expressed concern that the project would be another burden for SEPTA at a time when the transit system is preparing to raise fares and cut service due to its $240 million annual deficit projected for next year, which agency leaders have called a "death spiral."

"It is up to the Sixers to make that site work for their project, and a part of making that site work is figuring out how in the world we come up with $20 million to $25 million to fund the increased operational costs," Councilmember Jamie Gauthier, a progressive who has been critical of the project, said Thursday. "They should be the type of corporate citizen to come to the table with the resources. This is their plan. This is their project. This is their site."

The team has agreed to pay for physical changes to Jefferson Station during construction, but it has not agreed to compensate SEPTA for added operational expenses.

A 76ers spokesperson said the team is "working closely with SEPTA to review their analysis so that we can ensure the projections are accurate and limit any incremental operational costs on the system."

"We have always been committed to covering the costs of necessary modifications to Jefferson Station because of 76 Place construction," the spokesperson said. "We are also investing funds to incentivize SEPTA ridership to 76ers games."

For SEPTA, that may not be enough.

"The reality is that SEPTA simply can't assume these new costs within the framework of its operating budget," SEPTA interim general manager Scott Sauer said. "SEPTA cannot shoulder the burden of expanded transit costs at [the arena]."

The likelihood that the arena would add costs to SEPTA further complicates the 76ers' repeated contention that the project will cost local taxpayers nothing. In addition to fares, SEPTA receives money from the city budget, suburban counties, and the state.

But Council appears undeterred in its efforts to approve the project before the end of the year, as the 76ers have requested.

Council President Kenyatta Johnson said Thursday that he is adding an extra session to Council's 2024 calendar due to procedural rules in state law that dictate when Council members are allowed to vote on one of the 13 pieces of arena legislation. (The measure would remove the arena site, which is currently part of the Fashion District, from an existing tax increment financing district for the shopping mall.)

The extra time could also allow the team to iron out issues that have come up during Council's extensive hearings on the proposal, such as continued negotiations over the $50 million community benefits agreement and SEPTA funding.

SEPTA key to 76ers plan

The 76ers are counting on at least 40% of attendees using public transit to get to games, which would be a major increase over fans' current habits. About 85% of people drive to events at the Wells Fargo Center, the team's current home, according to facility owner Comcast Spectacor.

Reaching 40% transit usage is a key assumption in the 76ers' plan to address concerns about the availability of parking in Center City and the potential for gridlock near the arena, which would be blocks from Jefferson University Hospital's trauma center.

Some opponents of the arena have said that goal is unrealistic.

"With SEPTA already spread thin, expecting SEPTA to shoulder the financial burden is both unrealistic and unfair," Councilmember Jeffery "Jay" Young Jr. said in a Council speech Thursday. "We cannot rely on hypothetical projections of ridership when the reality is that these numbers are unattainable."

Jefferson Station is one of the three Center City stations that all Regional Rail trains pass through. Those lines currently run at one- or two-hour frequencies late at night, when 76ers games would let out. SEPTA officials said this week the agency would have to increase frequencies to at least every 30 minutes to handle Sixers crowds, which would require an additional 20 trains, the main driver of the estimated $21 million in annual costs expected.

The transit system must run those added trains every night, and not just after games and concerts, because predictability about train frequency is key to building ridership, Sauer told Council this week.

SEPTA runs added Broad Street Line trains after events at the South Philadelphia sports complex, and it is not compensated by the owners of the three major sports venues. Sixers senior vice president Alex Kafenbaum told Council last week that the team is simply asking to be treated like Philly's other sports franchises.

But accommodating game night crowds in Center City would be an entirely different ball game, Sauer said Wednesday. Because the existing stadiums sit at the end of a subway line, SEPTA can easily stack trains at NRG Station and release them when spectators pour out of games. Jefferson Station, on the other hand, sits in the middle of the Regional Rail lines, and it's impossible to stack trains in the system's Center City corridor.

Additionally, the Broad Street Line already runs about once every 10 minutes in the evenings and wouldn't need a vast increase in frequency to meet demand, he said.

Long-term SEPTA funding solution needed

In addition to the added $21 million in annual expenses once the arena opens, disruptions to service during demolition and construction could cost SEPTA $20 million to $50 million, agency officials told Council, although they acknowledged a more accurate estimate is not yet possible because the 76ers have not finalized the arena's design.

The added operational cost during construction would be separate from the money that the 76ers will spend on rebuilding the top of Jefferson Station for the arena, and it would be partially the result of expected decreases in ridership caused by delays or temporary station closures.

Mayor Cherelle L. Parker's administration has said the city would not subsidize SEPTA's operational costs related to the arena.

"That's not something the administration would contemplate," Michael Carroll, deputy managing director for transportation and infrastructure, told Council recently. "That responsibility is going to be the subject of conversation between SEPTA and the Sixers."

For Squilla, the answer is to find a long-term funding solution for SEPTA.

He pointed to Gov. Josh Shapiro's recent commitment to address the agency's looming fiscal crisis and said state lawmakers are having conversations about using future revenues from taxing so-called skill games, the slot machine-like consoles that have popped up in bars and convenience stores across the state but are currently unregulated.

"We gotta do everything we can to help fund our public transit," he said. "Even if the arena doesn't come here, we've got to still do that."

He said that the city did not require the Vatican to pay SEPTA for added ridership during Pope Francis' 2015 visit and that FIFA is unlikely to pay SEPTA during the World Cup games that will be played in Philadelphia in 2026.

"If we're going to require anybody that brings people into the city — is FIFA giving SEPTA money for operating costs?" he said. "Did we ask the pope to give money when they came here?"

Gauthier, however, said that those were different circumstances.

"The pope was a one-time event," she said. "The papal visit did not happen at a time when SEPTA is in the midst of a quote-unquote death spiral."

Although most Council members have not yet taken a position on the arena, City Hall observers expect a majority will vote to approve it given the support it has received from Parker, the building trades unions, and other powerful groups. The SEPTA question is unlikely to stop it in its tracks.

"That's a concern for everybody," Councilmember Mike Driscoll said of SEPTA. "I don't think it's something that can't be overcome."

Staff writers Thomas Fitzgerald and Anna Orso contributed to this article.

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