I don't think the stenographer can hear you. I can't hear you either.
Okay. What part did you not hear? And as you recall, Miss Wilkerson, we had the discussion and subsequently, I forwarded a letter to the Mayor requesting that this be done in an administrative action. And can you give me the status of that, and if you don't have the 111 2/5/01 FISCAL STABILITY - RES. 010024 status of that at this point, can you let me know at some point in time where we are with that request?
Yeah. I'll get back to you. While you were out of the room, we talked about it briefly, you know, that there are two things. Individuals were interested in using part of the $18 million. The cost of gas has increased dramatically since you last proposed some kind of increase. We're talking with some legislative representatives from Harrisburg who are also interested in trying to look for -- for possibly using State funds as a way of trying to support that population group that doesn't qualify for CRP. But I will get back to you in more detail with exactly how we might proceed.
Thank you. Mr. Dubow and Ms. Davis, with respects to revenue projections, I've heard a lot of testimony as it related to that. One of the things I wanted to ask you about is this issue of economic development and revenue projections as it relates to economic developments. 112 2/5/01 FISCAL STABILITY - RES. 010024 If you recall, over the last several years, we've instituted a couple of programs. One is the Tax Incremental Financing Districts, and the other recently is the KOZ, the State- authorized development opportunities. And my question is, particularly on the TIFs, in your revenue projections, do we take into account what we are being told here, and every time we have a hearing, the potential for additional jobs, the increased revenue associated with those jobs, sales tax, sometimes U&O, and sometimes real estate. Do we take that into account when we project these revenues? And what stage in the life of the TIF program, if we in fact do, do we take that into account?
Unless it was a very big project, we probably wouldn't specifically build it into our projections, but we look in general at what TIF projects have done. So I don't think you'd be able to say that this project meant this to our revenue projections. But en masse, they're accounted for.
All right. En masse? I don't understand that. 113 2/5/01 FISCAL STABILITY - RES. 010024
As an example, right now, it's my understanding, I think we have between and TIF proposals, and I think only 7 maybe 5, 6, 7, 8 of them have actually been 8 implemented. I think two of them right now, to my 9 knowledge, are under construction -- the 15th and 10 Spruce and the Filbert Street Garage development. 11 It's my understanding we'll include some 12 additional retail developments. And those are, I 13 guess, mid-range as it relate to TIF. But the 14 fact is that they are under construction, and 15 there was a lot of discussion about the additional 16 revenue that will be created. 17 Do we calculate those to that level of 18 specificity as it relates to -- 19
Not at that level of 20 specificity, but what will happen, for example, is those will have an impact on the level of construction activity. And one of the things we look at in developing our projections is what's going on with construction. So it wouldn't be that the specific project in itself would be in 114 2/5/01 FISCAL STABILITY - RES. 010024 our projections, but its impact on construction would be.
What about a larger one, such as the waterfront, the Simon-DeBartolo -- well, Simon now -- project? I mean, that's as substantial as -- what was it TIFed up to, like $70 million, I believe?
I think that's right. That's also not specifically in our numbers, but again, in looking at where the economy's going over the next several years and looking at what we think will happen in hospitality and tourism, one of the things that we factor in is the fact that that project is likely to come on board. And, I mean, it's the same theory looking at the tax abatement strategy or the KOZs. For each of those, I mean, assume that they'll have some impact on the economy in general. So it's one of the things in getting to like a 3.25 percent projection for the wage tax. We're assuming that there will be job generated from these projects.
So I guess you're saying that those projects are too speculative to 115 2/5/01 FISCAL STABILITY - RES. 010024 include -- to incorporate them into --
To do each one, that's right. And on the other side, I guess, you'd say that when we take a TIF for the abatements, we also look at what they do to the real estate tax.
So that, you know, one of the reasons that's not growing more robustly is because we know we're giving some of that up.
Thank you. Appendix 2, Long-Term Obligations Sinking Fund Commission, what are the assumptions with regards to the long-term leases in general? And in particular to the blight program and stadium transactions during the plan period, what are the budget assumptions for FY '02?
For each of those projects, we're assuming a full year's worth of debt service 116 2/5/01 FISCAL STABILITY - RES. 010024 payments in '02 and then in each year of the plan. For the blight bonds, that amounts to million a year. For the stadium bonds, I think 5 it's about the same number. I have to get back to 6 you with the exact number on the stadiums. 7
Can you tell 8 us where that is in the -- what page? 9
Why is the 12 projected interest costs on City long-term debt 13 projected to increase by 26 percent, while 14 principal payments are projected to decrease by 15 50 percent during the plan period? 16
It's really -- it's just an 17 accumulation of our various debt-service 18 schedules, and we just plug those in. And I'd 19 have to actually go back and look at which issues 20 had escalating interest with declining principal, but I can't give you a specific issue now that -- to answer that.
Could you tell us where the operating and maintenance costs associated with the new Eagles stadium are in the out-years of the plan?
They're also included in long-term obligations in Class 200 in long-term leases.
Are you talking about the operating and maintenance, the $6 million?
Is that what you were referring to, Mr. Dubow, the $6 million?
Can you break those figures down and forward them to us, 118 2/5/01 FISCAL STABILITY - RES. 010024 please?
The plan mentions that the City Planning will be compiling a brochure on "Good Neighborhood." What is the intended purpose of this brochure and how will it be used?
Somebody from City Planning's going to come and answer that. (Witness comes forward.)
Has that brochure been prepared, and could we possibly see a copy of it?
Good afternoon. My name is Ernie Leonardo, Director of Strategic Planning. We have internally prepared a very short list of neighborhood standards that affect the physical condition in our communities. We have shared that with the Administration as part of the Neighborhood Transformation Initiative, and we can certainly send a copy over to you. We have looked and done some research of what other cities have used as standards and 119 2/5/01 FISCAL STABILITY - RES. 010024 what is in the national literature. We have also tied it to some of the standards that were put together in the 1960 Comprehensive Plan for this city, when our population peaked.
I'm sorry, I was distracted. You said that the brochure has been prepared?
The text has been prepared. We have not yet put it into a nice glossy publication, but that's coming. We can certainly send you the text.
The intent is to have an idea what makes a good neighborhood and how we could apply these standards as we move forward with neighborhood transition initiatives, just to set a certain base standard in the physical condition of all of our neighborhoods. It relates to -- you'll see standards in there on the number of (indiscernible) facilities per thousand population, the condition of the streetscapes in our neighborhoods, the number of libraries we should have per 10,000 120 2/5/01 FISCAL STABILITY - RES. 010024 population. These are standards that have been drawn from other cities from our 1960 Comprehensive Plan in Philadelphia and from national literature.
Will the Fairmount Park Commission be responsible for the tree removal portion of the NCI? And will this work be done by City employees?
The work will actually be done by contractors, and it will be overseen jointly by the Managing Director's Office and the Fairmount Park Commission.
I'm sorry, is this better? The work will be done by contractors and it will be overseen jointly by the Managing Director's Office and the Fairmount Park Commission.
Mr. Leonardo, do you mind coming back to the table? We'd like 121 2/5/01 FISCAL STABILITY - RES. 010024 to go back to the brochure. Councilman, do you want to ask questions, please?
Thank you, Madam Chair. Just as a follow-up on that particular issue, you said that this brochure is -- the text is developed and I guess it's going into production shortly?
Yes. It's not a grand publication; it's a four-page brochure.
Okay. And these guidelines, they were developed by the Planning Commission?
Okay. Has there been any, I guess, involvement or discussion with community-based organizations or other people or Councilmembers or any --
This is one of -- part 122 2/5/01 FISCAL STABILITY - RES. 010024 of -- part of what we're trying to work through as, you know, as we think about neighborhood transformation is some kind of rationale for allocating resources. And it's not a final document, it's not a final proposal; it's something that was generated as a way of trying to help us think about how it is that you guide investment, you know, that no neighborhood should have, you know, imminently dangerous buildings. You know, every neighborhood should have, you know, recreation facilities. It's more of a -- something that supports a planning process and helps us help the City think about planning. It's the kind of thing that will be developed ultimately in connection, in conjunction with City Council, community groups, but the Administration has tried to think and work it through before, you know, we start moving it and having -- soliciting reaction to it. It's not something that is, you know, final. It's just a way of trying to inform a planning process or an approach to planning. Is that fair? 123 2/5/01 FISCAL STABILITY - RES. 010024
Okay, just, I guess, lastly in that regard, I mean, does this document, or the anticipated use of it, seek to take into consideration a fairly significantly reduced amount of capital dollars that will be available over the next few years that, in comparison to previous years, where maybe you could afford to dream small, if not medium-size, dreams for investment in neighborhoods, it appears that we will shortly have no money to do anything with.
Some of the standards reflect the number of facilities per certain number of population. And we are a mature city, so we do not foresee expanding the City's base of neighborhood-serving facilities. I think the quality is another issue, and I think we do look down the road, and we are concerned about the level of funding that would be allocated for the capital infrastructure of the City, and I think we're beginning to explore with the Budget Office and the Mayor's Office alternative ways of ensuring that we do, in the 124 2/5/01 FISCAL STABILITY - RES. 010024 long term, have sufficient dollars put to maintaining and improving the quality of what we have now.
Okay. I have so many questions on the NTI. I mean, most of, I guess, my questions are in that direction. When the Department of L&I encapsulates a building under the NTI, will a public entity take title to the building? And if so, which entity?
I don't have that level of detail, and a lot of that more detailed planning is coming out of the departments. They are currently putting together fairly detailed plans for vacant lot cleaning, encapsulation. I can get back to you.
Well, I think we would all like to know answers to this program. The plan also states that the Administration is looking at a legislative agenda to strengthen the enforcements and penalties as well as taking title to property. Again, if this is on the agenda, we know absolutely nothing about 125 2/5/01 FISCAL STABILITY - RES. 010024 it. Can you share with us what this agenda will be?
Part of it is -- I mean, some of the considerations are considerations that require State legislation. For example, in Maryland, there's a quick-take strategy that has been used in order to get properties into the public domain more quickly so that you don't have properties sitting around while the traditional eminent domain condemnation evolves. Some of the strategies that we're looking at involve more aggressive use of other legal theories for exerting pressure on property owners to, in fact, maintain their properties. They don't require any kind of legislative activity out of City Council. There are a whole range of strategies that are being worked on. I mean, I think -- I mean, your question reinforces your point, that the Administration needs to conduct perhaps a status briefing for City Councilmembers so that there's a coherent way of having these questions reviewed as opposed to sporadically, as we go through the 126 2/5/01 FISCAL STABILITY - RES. 010024 budget process. One of the things that we have done is try to make neighborhood transformation a goal of every department in the City, and so the Law Department has various initiatives it's undertaking in support of neighborhood transformation, L&I does, the Streets Department does. But perhaps it would be more useful to have the issue discussed as a whole as opposed to, you know, picking out parts of the plan for discussion as we, you know, migrate through the budget.
All right. Please explain what the Reinvestment Fund is and how it will work. And how is it funded?
You're referring to. . . The Reinvestment Fund, as it's referenced there, is the old Delaware Valley Community Reinvestment Fund. One of the concerns that has been expressed historically is, you know, where are we going with our whole CDBG program. Are we getting the kind of run on our investment that we ought to. The Administration has retained the Delaware Valley Community Reinvestment Fund, 127 2/5/01 FISCAL STABILITY - RES. 010024 now known as "the Reinvestment Fund," to try to, you know, in order to undertake that assessment, to help us develop a strategy perhaps for more appropriately spending money. You know, Councilman Nutter, for example, has asked the question, you know, why should all of the money go, you know, to the 5th District, what about my district? And it's in part in reaction to those kinds of questions over the years that we've taken a step back and are looking at, you know, the strategy that we've used. The Delaware -- the Reinvestment Fund has done enormous work in this area, has done a lot of very progressive thinking in this area. And we've retained them as experts in helping us undertake that analysis.
Okay. The economic development section of the plan talks about the expansion of the Convention Center and states that it is crucial to the future of Philadelphia's hospitality and tourism industry and to the vitality of the City's hotels. That's on . 128 2/5/01 FISCAL STABILITY - RES. 010024 The plan further states that the expansion would cost an anticipated $464 million and is projected to result in 3,000 new jobs, $84 million in wages, and $138 million in spending, according to an economic impact analysis prepared by PFK Consulting, . Is the expansion of the Convention Center included in the plan?
No. The Administration is evaluating the desirability and feasibility of expanding the Convention Center. There's been no 13 final decision made about whether to propose the expansion to City Council.
Well, how can the City afford to expand the center based upon the out-year projections of the plan, as reflected in Appendix 3? I don't --
Well, I mean, I think that's, you know, that's one of the factors. You know, if there are not other dollars that are identified, the City would have -- you know, it would be difficult to imagine how that might be done. I think that the strategy involving 129 2/5/01 FISCAL STABILITY - RES. 010024 tourism, you know, I think the City has invested enormously in tourism and that we ought to do the analysis, but I think our ability to actually pull off the expansion would in part, you know, turn on other resources. And so we're looking at that.
Okay. Operation Sunrise. Councilman Kenney, was it about three years ago when we had a meeting and we were promised that Operation Sunrise would expand and we would certainly see something in South Philadelphia?
Well, I think one of the suggestions at the time was that there's an area in South Philadelphia in the 17th District that may be not as widespread geographically as the Operation Sunrise area, but certainly from a level of violence standpoint, continual gunfire, continual pedestrians being hit on the street. As a matter of fact, the other day, a young girl got caught in cross-fire again. And what we suggested at the meeting was, it seemed to be an even easier area to control because it was so concentrated. But, I 130 2/5/01 FISCAL STABILITY - RES. 010024 mean, despite the yeomen's efforts of the 17th District and the South Division's narcotics people, it seems to get out of hand from time to time.
We were supposed to be getting additional money and some additional help.
I don't see that that ever was forthcoming. And I don't know how long Operation Sunrise is in one area and how long they're going to stay there. And are we ever going to see something positive happening in all sections of the City? I am so sick of what I see in my community.
I'll ask Commissioner Timoney to come up. (Witness comes forward.)
Commissioner Timoney, good morning. 131 2/5/01 FISCAL STABILITY - RES. 010024 COMMISSIONER TIMONEY: Good morning, ma'am. In regards to the 17th District, as I'm sure you're aware, we sent probably the last September and October additional resource because we were concerned also with the increase in violence. We put an additional 75 police officers in the Narcotics Division and basically gave probably about 30 to South Narcotics, where Captain Testa has developed an emergency response team that goes out on these drug-related shootings. I guess about after a month, we started to see results right away, where he made a connection between two rival drug gangs that were by and large accounting for most of the gun play in the 17th. It was between the 17th District and the 4th District, going back and forth. We've arrested all of those. And in the last, I would say the last four months, there has been a significant decline in gun-related shootings in the 17th District, compared to other parts of City. However, over the last six months, 132 2/5/01 FISCAL STABILITY - RES. 010024 there has been a decline -- with the exception of December, December because of the Lex Street, those seven homicides. Actually, we had turned around the extent of violence. And I could say, for example, so far this year, the homicides -- of course, we're only into February, but the homicides are down significantly, by about 50 percent. If you remember last year, it was in the Southwest where we had the big drug gang warfare that we sent quite a few resources into the area. As far as the Operation Sunrise, you know, clearly, it's -- while we have spread our resources as much as we possibly can, the original Operation Sunrise, the thing that made it so different than any other initiative was the involvement, a significant involvement of federal law enforcement. There was a significant commitment on the part of the DEA, of Customs and INS. And my sense is, they can't replicate to the extent they have in Operation Sunrise. And, again, I'm only speaking from a law enforcement perspective; I'm not talking about the, you know, boarding up buildings and things of that nature that fall into the purview of the 133 2/5/01 FISCAL STABILITY - RES. 010024 Managing Director's Office or some other office. But from a law enforcement perspective, those -- we have asked, we have asked the DEA for a bigger commitment. That has not come forward. Now that there's been a change in the DEA's office, maybe we'll get some more with the new administration. But it isn't because we're not cognizant or sympathetic to the South Division. It's just that the commitment on the other part of federal law enforcement resource aren't there. The final part, the whole quality of life, boarding up of the buildings, and cleaning up lots that was such a significant portion of the original Operation Sunrise, a lot of that has been folded under the Mayor's blight program and neighbor renovations.
Well, I'm not so much concerned about the vacant lots as I am about drugs and just how it's just taking over the entire -- some of the entire communities. And as I said, I don't know if Operation Sunrise is still in a particular section of the City, as it has been for at least three or four years now. And I'm not being critical of the 134 2/5/01 FISCAL STABILITY - RES. 010024 Police Department; I am just saying that I think they need help to address the problem in many of these areas. COMMISSIONER TIMONEY: We are -- we are -- by the way, this Operation Sunrise is not in the exact same area that it began.
Well, I think it was expanded a couple blocks over, according to what I see in this book. So if you're going to be expanding at a couple blocks over, I'd suggest a couple miles over so that we can get some of that attention too. COMMISSIONER TIMONEY: Well, let me just say it's more than a couple blocks; it's a couple miles, number one. Number two, no matter how you cut it, no matter which way you look at the numbers and the violence, the area that we are in in Operation Sunrise right now is clearly the most violent area of the City. I mean, there's no other comparison you can make. It doesn't mean they neglect areas like the South or Southwest or Northwest. But by and large, I mean, the violence in this city predominates and concentrates in that particular 135 2/5/01 FISCAL STABILITY - RES. 010024 area. And it's -- you know, we have been over there, and it isn't from lack of trying. That's an area, as I've said on numerous occasions, that quite literally was abandoned by both the police and the political administration for years, and it's taken an awful long time.
Thank you, Commissioner. COMMISSIONER TIMONEY: Thank you, ma'am.
Before Commissioner Timoney -- I just want to know if you can give us an update on the, I think it was the Civil Service Commission change on allowing you to recruit police officers from military installations, whether or not that's had any effect in the quality of recruitment and the numbers of people. COMMISSIONER TIMONEY: Yeah, that's -- actually, I hope to get into more of that at the regular testimony. But suffice it to say, I think we've 136 2/5/01 FISCAL STABILITY - RES. 010024 put a lot of effort and a lot of money, and we sent our sergeant and five police officers to quite a few bases along the eastern seaboard, and we got a total of people. Because while we got 6 a very positive response over the phone when we 7 would call those bases ahead of time, telling them 8 what we were trying to do, we were looking to come 9 in and administer exams. 10 When we got to those bases, it was an 11 entirely different situation because they were suffering from the same problem we were: a lack of candidates. And so we were not as welcome as I was expecting. And when we got to the bases, the commandant for the bases would say, Listen, you know, I've got to commit a thousand troops to Bosnia next month, you're not giving any exams on my base, I've -- I can barely keep my own quotas. It's a significant problem and --
Maybe you can expound on it later on. COMMISSIONER TIMONEY: I will, because it's a national problem.
Is it something that we maybe need to look at as far as people who 137 2/5/01 FISCAL STABILITY - RES. 010024 have actually made a decision to leave the military, as opposed to those are currently active within, say, a six-month or a year period of after leaving? 'Cause those people have made a mental decision to go anyway. It's not like you're -- it's not as if you're competing with the base commandant or the, you know, the base commander. COMMISSIONER TIMONEY: But the problem is you're both fishing in the same pool because the base commander is saying, you know, I know you're thinking of leaving, Corporal Kenney, but if you stay, we'll -- they'll give you extra money to stay.
Thank you. I'll continue on with my questioning. Under the section entitled "Promote Neighborhood Economic Development," that's , you state, "In order to attract businesses to the City's 138 2/5/01 FISCAL STABILITY - RES. 010024 neighborhoods, whether a corner store or a huge warehouse, the Administration has developed a comprehensive strategy to eliminate all types of barriers to entry." Would you please tell us, what is a comprehensive strategy? Anybody? Anybody?
Well, we'll get on to another question. On , the plan indicates that the City is now an application stage for a second round of KOZs, newly entitled Keystone Opportunity Expansion Zones. The City will be required to submit the application to the State by February of 2001 and is limited by the State to eight subzones, with a minimum of 15 acres. The Commerce Department is working with NTI planners and City Council -- I don't know who they're 139 2/5/01 FISCAL STABILITY - RES. 010024 working with in City Council because we just learned about this in just idle conversation last Thursday -- to survey the City for potential causes and sites that will be best complemented by the NTI plans. Who and when in my office have you contacted? Who are the NTI planners that the Commerce Department has been has been working with? Will the application require City Council approval? And if so, when are you willing to talk to us about the plan? I have to tell you, finding this out through the Five-Year Plan is really very upsetting. Again, we're supposed to pass this by February. I believe today is February what, the 5th?
And this would have to be done by an ordinance? 140 2/5/01 FISCAL STABILITY - RES. 010024
Yes, an ordinance is required. The Administration has identified -- the analysis of the appropriate sites is not as straightforward as it might seem. The Administration first has to go out and identify sites that meet the size requirements. The City has determined that it is not interested in having residential KOZs -- or historically is not interested in having residential KOZs and so have to look for sites where there are potential economic opportunities. You know, and so the analysis ends up being a fairly complicated analysis.
There are areas that have been determined that are not parcel-specific yet. And I believe that was shared with individuals from your office. The actual --
The legislation was made available last week. 141 2/5/01 FISCAL STABILITY - RES. 010024 It identifies by name areas; it is not site-specific. The representatives from the Commerce Department are supposed to be, you know, meeting in order to review those sites and to solicit additional information. Some members of Council have independently contacted representatives from the Commerce Department to identify sites that they're interested in having analyzed.
The plan states, with regards to technology and telecommunications companies, the City strategy will be directed by a governing board made up of representatives from the private and public sector, which will establish policy and make recommendations concerning workforce training, business incentives, and infrastructure improvements. What will be the makeup of the board? When will this board be appointed? Is this an area -- this is an area of particular interest to City Council. If you recall, Councilman Kenney and I both introduced and passed legislation with the goal of enticing these companies to locate in 142 2/5/01 FISCAL STABILITY - RES. 010024 Philadelphia. What role will Council have with regards to the governing board?
The final composition of the board has not been determined. The Administration understands that there's several sectors that need to be drawn in, in addition to, you know, elected officials there, there are private industry people who are currently involved in new industries -- for example, some of the some kind center activity. The universities play a critical role in helping the City formulate and direct future growth in the new economy sector. And so there's consideration being given to broad-based participation, and elected representation is part of that. As you know, the State's also been a major player in those initiatives, and so there will be State representation as well, but the final composition or structure hasn't been decided upon.
I have many more questions. Councilman, do you want to go next? 143 2/5/01 FISCAL STABILITY - RES. 010024 The Chair recognizes Councilman Nutter.
Thank you, Madam Chair. Mr. Dubow, I'd like to go back to the tax area. We have, I think, over the past number of years, since the last administration started the tax cut strategy, it's certainly a move in the right direction with regard to wage tax and business tax cuts. Continually, though, there is ongoing discussion, and I know you, as the Budget Director, and Miss Davis, as Finance Director, and the Chief of Staff to continue to try to be as responsible as possible. The flip side of it is, I think, estimates by the Pennsylvania Economy League indicate that it would take us about 50 years to reach some kind of level tax scenario between the City and our surrounding suburbs, based on the path that we're on presently. Have you looked at any scenarios that would allow for a more aggressive tax cut schedule as well as any other taxes if you're aggressively cutting the wage and business taxes and any other taxes to help offset those losses, taxes that may need to be increased, or a complete change in our 144 2/5/01 FISCAL STABILITY - RES. 010024 tax structure and any elimination of the wage tax and replacement by some other way of taxes that are more competitive and less regressive?
We have actually, I guess, within the last month started a process to do just that. It will actually have a few components, one of which, is the Commerce Department is actually going to go out in each of its -- each area of the City and talk to businesses and talk to them about what they think is wrong with the tax structure and how they think it should look. We are also going to look again at our econometric model and see what it shows us in terms of the impact of various taxes and whether there's a different alignment of taxes that might work better for our economy. And we also plan to work with Professor Inman from Wharton who does an analysis every several years of what taxes have meant to jobs in the City.
Would you anticipate that the Administration representatives would also work with the Council Committee that was approved last year to put together a tax 145 2/5/01 FISCAL STABILITY - RES. 010024 reform committee? There was a resolution passed by the Council last year to establish such a committee. Do you anticipate working with Council on that?
Okay. Can you share with us, even in a preliminary fashion, what you think some of this information might show, or from your own a analysis, do you have any preliminary analysis of what a more aggressive tax reduction schedule might look like?
We've really just started on this, so I don't really have any preliminary results.
Okay. It's mentioned in, I think, in the testimony from this morning that the plan includes $160 million for NTI, including debt service on a $250 million bond issue. Can you tell me what the components of that $160 million figure are?
Yes. There's $20 million a year in debt service on the bonds, so that's 146 2/5/01 FISCAL STABILITY - RES. 010024 100 million. There is 6.5 million a year in the Managing Director's Office budget for lot cleaning. There's 3.5 million in the Managing Director's Office for tree removal. So that 6.5 and 3.5 together is million a year. So that's 7 another 50, which brings us up to 150. And 8 there's also 2 million a year in new lot cleaning 9 money in Licenses and Inspections, and that gives 10 you the other 10 and you get your 160.
Are all of those dollars recurring figures? I was under the impression that the lot-cleaning was a one-time expenditure, that the tree removal was one time as well.
The tree removal -- neither one is one-time. The tree removal is a multi-year project to get rid of the backlog. And then some of that funding, when the backlog is gone, will move over to pruning, but there will be 3.5 million a for tree care, whether it's removal or pruning, throughout the life of the plan.
Are you saying an additional 3.5 million over the current one, or is it -- 147 2/5/01 FISCAL STABILITY - RES. 010024
That's right, an additional 3.5 over the current one, that's correct.
So we're moving -- so are you now saying that after we take care of the backlog that we're going to move to a $4.5 million street tree maintenance program?
Okay. I appreciate you guys finally coming around on that issue.
As I started to say it, I thought, Why Rob, why do that to yourself?
With regard to the 20 million a year and the debt service on the 148 2/5/01 FISCAL STABILITY - RES. 010024 blight elimination bonds, I thought I had begun to read material that seemed to indicate that the $20 million is the total debt service on a $250 million bond program. I thought I had begun to read in some of the materials some indication that the anticipation was not to seek one bond offering in the amount of $250 million but a bond offering spread out over possibly a four- or five-year period of time, totaling $250 million. Is that correct?
There are several scenarios for how the bonds might be issued, and you're correct that some of the more recent thinking has been that they'll be spread out over time. If that's the case, in the first couple of years, debt service would be lower, and our anticipation is that we would then, if that happened, come back to Council and ask to transfer some of that money to other NTI initiatives.
Okay. And I think the number was 8700 dead and dangerous trees that were a part of the more recent announcement?
Did I get the 149 2/5/01 FISCAL STABILITY - RES. 010024 impression that we were not anticipating doing those 8700 in one fiscal year but over a period of time?
Yeah, we're looking at doing between 4,000 and 4300 a year. We also anticipate that there will be new dangerous trees every year so that it would take three or four years to eliminate the backlog.
Okay. Who's going to perform the work at the new stadiums that's now being done at Veterans Stadium by Recreation employees?
The Phillies and the Eagles will be responsible for that work.
Okay. So all of the work that's currently being done at the Vet by Rec Department employees, a wide array of things, whatever that work is, in the new stadiums, it will not be done by any public employees, and the teams will have the responsibility for doing that. 150 2/5/01 FISCAL STABILITY - RES. 010024
Okay. What, if any, efforts are being made by the City to increase the number of young people who actually graduate from high school, going on to college, and people who are currently in the workforce who may or may not have any college experience, going on to complete their degree programs? And what programs does the City have for its own employee workforce who want to upgrade or improve their educational skills?
I'll ask Miss Seyda from Personnel to come up and talk about the City workforce portion.
Who's going to talk about the non-City workforce portion?
Jim Cuorato is on his way, so when he gets here, he'll talk about that.
He's going to talk 151 2/5/01 FISCAL STABILITY - RES. 010024 about that? Does he know he's going to talk about that?
Good morning. My name is Linda Seyda, the Personnel Director for the City of Philadelphia. If I could just make a couple of comments. First of all, in terms of students who are not yet in the workforce, you may be interested in knowing that very recently, the Personnel Department, together in a collaborative way with the union and the School District, have initiated discussions in terms of looking at ways to encourage high school kids in our school system to become City employees. And this is in a very early stage at this point in time, but we think that it looks promising in term of establishing a partnership relationship with the School District and encouraging some of our students to complete their high school program and to become City employees. Again, that's in the very early stages. This program that I just talked about 152 2/5/01 FISCAL STABILITY - RES. 010024 is -- or would be patterned after a program that we also have with the School District with -- to encourage young people who are in the automotive trades programs in the District to become City employees, enter the City workforce. And they do this through an apprenticeship program, which has been structured between the City and the School District. And the Office of Fleet Management is the City agency that brings the students into the City workforce. In addition, we have an upward mobility program within the City government for career employees who have an interest in developing their skills and becoming professional employees. And it's a structured program. The students do receive some tuition reimbursement. And it's a program that's been in place for a number of years, and while it doesn't have a lot of participants, it has been very successful in terms of providing upward mobility opportunities.
How many employees have the opportunity to participate in a tuition reimbursement program with the City?
I don't have the numbers 153 2/5/01 FISCAL STABILITY - RES. 010024 available here, but I will be happy to provide them for you. Again, it is not a lot of employees, but it is a program that has worked. It has worked well and it's a --
Well, is it across all of the employee ranks, union, nonunion? I mean, do all or 25,000 employees have the 9 opportunity regardless of work location to 10 participate in such a program? Or is it specific 11 to a department or agency? 12
No. The program that I 13 just mentioned is targeted for clerical employees, 14 career clerical employees in the City who have 15 some college education and who wish to develop 16 their skills and complete their college degrees 17 and promote into entrance-level professional 18 positions within the government. 19 There are other tuition reimbursement 20 programs in other City agencies. They vary 21 considerably from one agency to another. To some 22 extent, it depends upon the availability of 23 funding within particular agencies. If you are 24 interested in more specific information, we have that available, and I'll be happy to provide it to 154 2/5/01 FISCAL STABILITY - RES. 010024 the Council.
You talked earlier about an internship program with Fleet Management. Do other departments or agencies have internship programs or opportunities for young people?
Yes. Specifically, the Water Department is an agency that has been actively involved in developing and promoting developmental opportunities, apprenticeship programs within their agency. And somebody from the Water Department could probably give you more specific information, or I'd be happy to provide it to Council.
All right. If you can get detailed information to the Chair with regard to any and all educational opportunity programs, internship programs and tuition reimbursement programs, and the details related to them, I'd be very interested in that.
Sure. We'll be happy to 155 2/5/01 FISCAL STABILITY - RES. 010024 provide that to you.
Thank you. The Chair recognizes Councilwoman Blackwell.
Thank you very much. Would you please comment on dealing with the City workforce, the state of the Pension Fund, and the Administration's plans to finance the fund to full levels? Particularly given the expectation of new contract negotiations at the end of the year in December, will another bond have to be issued or other financing, is it being sought? And also, are we considering what innovations other cities might have implemented?
It's not anticipated that we would be issuing any additional bonds. We are looking at perhaps utilizing State law that would let us amortize it over -- the remaining obligation over a longer period. But at this point, there's no anticipation of doing any 156 2/5/01 FISCAL STABILITY - RES. 010024 bonding. And the Pension Fund is in fact fairly well funded.
Two more issues. On , predatory lending is mentioned, and we certainly commend the Administration on that issue. As you know, the Kingsessing area is mine, and I believe it's listed as number one, where people have been taken advantage of in this way due to the predatory lending practices. And certainly, the programs listed, counseling and others and "Don't Borrow Trouble" are very, very important to the citizens that I represent as well as the citizens of Philadelphia, and we are glad to see it listed in our Five-Year Plan. In terms of our fiscal health, revenues from the Public Utility Realty Act, PURTA, are expected to decrease due to deregulation. Are we able to, or do we have any plans to try to recoup 157 2/5/01 FISCAL STABILITY - RES. 010024 through some other means some of the money that we lose?
In the plan, we've actually taken those revenues down to show the loss of PURTA.
There are a couple of instances where there is litigation over the amount of payments that utilities owe, and we've joined in those lawsuits and we hope to recoup some of the revenue through that. It won't make up for all of the loss, and that's a hit that the plan has taken.
Thank you. Mr. Isdell, I notice that it's snowing, and I'm sure you're very anxious to get back to the airport. If you don't mind taking the witness table, I think there are a couple of questions that Councilman Rizzo and, I believe, Councilwoman Blackwell would like to ask you. Councilman Rizzo?
Thank you. Thank 158 2/5/01 FISCAL STABILITY - RES. 010024 you. First of all, Mr. Isdell, congratulations on your appointment as Director of Aviation. On a snowy day, you might not appreciate that.
I understand that in 2006, I believe, the gates and the various terminals will be up for new contracts, new negotiations, new deals with the airlines. When do you plan to start those negotiations based on if they are in 2006? Is that correct, 2006?
That is correct. I don't know for sure when we would begin negotiations. We actually had our first meeting, the plan for the end of the 32-year lease agreement last month. And currently, the first thing that we want to do, there are a number of airports, major airports in the United States like Philadelphia International that entered into 30-year agreements in the 1970s. Some significant ones will be expiring over the next two or three years. We are going to be watching what they do very carefully. 159 2/5/01 FISCAL STABILITY - RES. 010024 The trend in the industry is not to enter into such long-term agreements looking forward. In fact, the longest term we contemplate at the moment would be five years, but we're really just at the beginning stages of that process and we wanted to give ourselves -- it may seem early, looking five years out, but we wanted to give ourselves enough time to see what else is going on in the country, and then if the ultimate decision is to either negotiate or in fact do some type of request for proposals, we'll have plenty of time to get that done before the expiration. I believe it's June 30, 2006.
That's what -- since we were discussing the Five-Year Plan, why I had an interest in the way we plan to use business. I use an analogy of -- and many people in the letters that I get and the people that I have conversations with talk about the lack of competition here in the City of Philadelphia, where many people go to Atlantic City, Baltimore, Newark, and other airports because the ticket to travel is sometimes a third less. Could you comment on what we could do 160 2/5/01 FISCAL STABILITY - RES. 010024 to make people that live and work in Philadelphia not drive to Atlantic City, not drive to other airports to travel?
Well, as the airport operator, the most important thing that we can do is try to foster some competition. We do have sort of a two-edged sword. As a dominated airport with a hub carrier, US Airways, that controls about 65 percent of our traffic, it's difficult for the other airlines, particularly the smaller and newer-entrant airlines, to compete on, you know, on very many routes. So there is competition on limited routes at our airport currently that's provided in addition to the other five signatory carriers, which is Continental, Delta, TWA, Northwest, and American, in addition to US Airways. We also have a number of smaller airlines that are currently operating as subtenants of some of those signatories. Those include Midway, which flies a lot of traffic now to Florida, and ATA, which flies daily to Midway Airport in Chicago. We also have -- in Terminal D, we have AirTran, which is considered to be a 161 2/5/01 FISCAL STABILITY - RES. 010024 new entrant, but it's growing sort of in the mold of the Southwest Airlines. And our goal is to provide gate capacity so that those smaller airlines will be able to get a better foothold in Philadelphia by providing more competition to the tremendous daily network that US Airways has. Right now, US Airways has over 400 daily departures out of Philadelphia. So the competition -- the next largest airline, I believe, is United or Delta right now. They're in the range of 7 percent -- United, Delta, and American. So with that level of dominance, it's difficult in the market for US Airways to be encouraged to be encouraged to lower their fares. We do meet with them. And we currently -- I met with the US Airways regional sales director about a week ago on a particular issue related to the Convention and Visitors Bureau project, which is trying to get additional business meetings in Philadelphia this year. We try in every that way we can to drive home the fact that we do not like to lose business to Baltimore and Atlantic City and the 162 2/5/01 FISCAL STABILITY - RES. 010024 Lehigh Valley airports, and that their fare is a part of that equation. And I believe that they are listening and, you know, their answer generally is that if people plan their trip far enough in advance, they do have what they feel are competitive rates in that context. But there is work to do, and our role is to provide that level playing field so that other carriers can get in there and provide the competition which keeps fares reasonable.
You indicated that you're going to be watching very closely some of the deals that are struck throughout the country and hopefully learn by some of those deals and the structures in which they were put together. Let's talk about the current expansion at the airport. We're talking -- and hopefully I'm correct -- 42 new gates or somewhere around that number in the next few years? How did we decide how much the airlines that we utilize those gates actually pay for these new gates that will become available?
I'm sorry, I'm not sure I 163 2/5/01 FISCAL STABILITY - RES. 010024 understood the last part of your question.
In other words, we're going to have 42 new gates, I understand, when the new terminals are completed?
Well, actually it's 38 this June in Terminal F. We'll have another 4 in Terminal D by the end of the year. That's 42. And then our International Terminal that opens next June will have additional. 11 So that's 55 new gates and compared to 12 -- currently, we have 65 total. 13
How have you -- what is the arrangement for payment for those new additional gates? How have those -- is there going to be a new contract for those gates, or are they going to be exercising a contract that's already in place? How do you charge them for new gates as they become available?
The new gates that are being developed in Terminal F and Terminal 1, the International Terminal, those were actually done as an amendment to the existing 32-year lease. So they will be allocated under that lease through 2006. 164 2/5/01 FISCAL STABILITY - RES. 010024 There is a formula in the lease amendment that applies to the commuter terminal that opens this June, whereby there's a process that has to be followed. US Airways provides us with information regarding their commuter schedule. We analyze that information and determine how many of the 38 gates they need to operate that schedule. And any surplus gates are then available for us to offer to other competitors. The Terminal arrangement is slightly different. It provides US Airways with 9 of the 13 new gates, and the other 4 are available for competition. And the Terminal D gates are actually being constructed with PFC funds rather than revenue bonds. So that our intention is to sign what we call "preferential-type lease agreements" rather than exclusive lease agreements on all of those new gates -- the 38, the 4 and the 13. Those will not grant any airline, including US Airways, the exclusive right to the new gates. At any time between now an 2006, under the existing agreement, if we feel gates underutilized, the airport has the ability to put 165 2/5/01 FISCAL STABILITY - RES. 010024 other carriers on those gates to maximize their effectiveness. Beyond 2006, again, we would be looking at entering into shorter-term leases, which again, hopefully, would be preferential rather than exclusive. The preferential gives a carrier the opportunity to operate on a gate with some assurance each day that they will have adequate space to do their daily schedule. But the fact that it's not exclusive gives the airport the opportunity to get competition on those same gates.
Based on the scenario that we live with, is competition possible? Could we get competition? Because, again, people are going to Atlantic City, Lehigh Valley, Baltimore, and telling me that they save a third in the price of their ticket. What can we do short-term to resolve or lessen that problem? I know you have asked US Air to rethink their pricing structure, especially when it involves a major convention or something that has an interest to the Department of Commerce 166 2/5/01 FISCAL STABILITY - RES. 010024 and the Visitors Bureau and people like that. But do you see anything that could encourage people? Because I assume, based on the taxes associated with travel from the airport, there's a significant amount of revenue lost to the airport because people are going other places. As a matter of fact, in this room today, I had individuals say the exact same scenario, that they went other places to travel.
Well, I think, again, there are two sides to this issue. We do enjoy the benefit of a hub carrier that provides us with over 400 departures every day. That gives us a kind of convenience, which is particularly of use to business travelers. And the downside of that, though, is that with minimal competition, you know, the market does not necessarily -- there's certain routes in which -- for example, Philadelphia to Pittsburgh, where US Airways essentially enjoys a monopoly and therefore they can charge higher fare for that route. Again, in order to get the fares down, aside from bringing competition in, I think that the best thing that we can do is encourage people 167 2/5/01 FISCAL STABILITY - RES. 010024 to shop prudently, use the Internet. Although it is alleged, and I think anecdotally I've heard many similar stories that we are losing some passengers to Baltimore. The fact is that the year 2000 was our busiest year ever. We haven't finished the count, but we're over 24.9 million passengers. The biggest year we had prior to that was 1998, when we had 24.2 million. Just five years or so ago, we were in the range of million passengers. 12 So the traffic continues to come to the 13 airport, and a lot of that traffic comes because 14 we're a business traveller airport to a large 15 extent and because we do have this convenience of 16 it being a hub of a network that gets people to the destinations they need. Our job is to provide enough gates and some new leases so that we can get competition on some of those routes, but I don't really have a formula for you beyond that. We are also going to try to promote the airport. And in so doing over the next year, it's our intention to also try to promote some of the smaller carriers. We have our lawyers working on looking at the federal law, et cetera, to make 168 2/5/01 FISCAL STABILITY - RES. 010024 sure that there is no problem in doing that. There have been a couple of other examples where airports join together with carriers and do some joint promotion. That's actually been encouraged to some extent by the recent Congressional legislation, which required us to do a competition plan. The competition plan was submitted by our airport last September. It has been reviewed and approved by the FAA, and I think that may be a blueprint that would give you a more comprehensive answer to your question, which we could certainly provide through the Council President's office, if that would be acceptable.
My final question, and I appreciate this opportunity to learn more about this. Could you just describe -- you indicated that the leases were amended. Could you please describe what the process is to have those leases amended?
Well, it's similar to any other, you know, city -- it's a city law department process. In the particular case that we're talking about, the 32-year lease was amended 169 2/5/01 FISCAL STABILITY - RES. 010024 in 1998 at the same time that Council approved the airport revenue bond and the financing package for the two new terminals. I don't know all -- every step of the process, I don't know if that's what you want, but if your question is, was it brought before Council? it was.
Yes. They were a part of the financing package for the construction of the two new terminals.
I hate to be skeptical, but was this something that was buried in the fine print, or was it in fact something that was absolutely discussed, that the leases were being amended to price the gates? Or was it the latter?