COUNCIL OF THE CITY OF PHILADELPHIA2 COMMITTEE ON PUBLIC PROPERTY AND3 PUBLIC WORKS4 5 6 Room 400, City Hall7 Philadelphia, Pennsylvania Wednesday, October 26, 20118 11:10 a.m. 9 10 PRESENT: COUNCILMAN DARRELL CLARKE, CHAIR11 COUNCILMAN FRANK DiCICCO COUNCILMAN WILLIAM K. GREENLEE12 COUNCILMAN JAMES KENNEY COUNCILWOMAN DONNA REED MILLER13 COUNCILMAN FRANK RIZZO, JR. 14 BILLS 110535, 110632, 110650, 110669 and15 110517 16 - - -17 18 19 20 21 22 23 24 25 2 1
Good2 morning. This is the Committee on Public3 Property and Public Works. We have4 established a quorum. To my left we have5 Councilman Rizzo, Councilman Greenlee and6 Councilman DiCicco.7 Mr. Carter, please read the8 title of the first bill.9
Bill No. 110632, an10 ordinance authorizing the Philadelphia11 Authority for Industrial Development12 ("PAID") to purchase a certain tract of13 land with the improvements thereon14 situate at 9470 Ashton Road, under and15 subject to the terms and conditions of16 the Philadelphia Industrial and17 Commercial Development Agreement among18 the City, PAID, and the Philadelphia19 Industrial Development Corporation, all20 under certain terms and conditions.21 (Witness approached witness22 table.)23
Please24 proceed.25 3 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1
Mr. Chairman and5 members of the Committee, my name is Tom6 Dalfo and I represent PIDC and the7 Philadelphia Authority for Industrial8 Development. I am here to testify in9 support of Bill No. 110632.10 This bill would authorize PAID11 to purchase an approximately two-acre12 property located at 9470 Ashton Road in13 the Grant Industrial Complex in Northeast14 Philadelphia for a consideration not to15 exceed $250,000. After acquisition by16 PAID, we will market the property to17 private companies for industrial18 development.19 This is an attractive location20 for modern industrial development in that21 it provides street frontage to a parcel22 already owned by PAID for industrial23 development. The site is in the24 Industrial Complex and surrounded by25 4 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 other stable industrial businesses. The2 site is located just a few minutes from3 I-95 and has access to a solid employment4 base, both of which are necessary to5 support an industrial operation.6 We intend to purchase the7 property to consolidate it with an8 adjacent property which we own and make9 the combined site more attractive to10 industrial businesses. In general, there11 is a lack of marketable industrial12 properties in the City, which greatly13 limits our ability to attract and retain14 industrial companies and the employment15 opportunities they represent. In a small16 measure, this acquisition will help to17 address this situation.18 The purchase price is the19 amount negotiated with the property20 owner. The current owner of the parcel,21 Trustees of the Burholme Congregation of22 Jehovah's Witnesses, has agreed to sell23 the site to PAID.24 The cost of this acquisition25 5 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 will be paid from the Industrial and2 Commercial Development Revolving Fund.3 I ask that the Committee4 consider this bill favorably and that the5 rules of Council be suspended to permit6 first reading at the next regularly7 scheduled meeting of Council.8 Thank you for the opportunity9 to testify. I'm happy to answer any10 questions you may have.11
Thank you12 so much. A couple of quick questions.13 In terms of obviously the14 marketability of this particular parcel,15 at a time when you're hopefully getting16 close to closure on the deal, is there17 any requirement to have any community18 input or is there any community in the19 adjacent areas? Because the only reason20 I ask that, because you don't know21 exactly what it will be at this point, so22 it's not -- we and City Council are not23 in a position to ask members in that24 local community if they're comfortable25 6 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 with the proposed development, because at2 this point there is none.3
I think there's4 some residential across Ashton Road. To5 the north, south and west, other6 property, it's all industrial. And7 Ashton Road, the access there is pretty8 good up to Grant Avenue.9 So there hasn't been community10 outreach per se. We've coordinated with11 the District Councilpeople in this area12 to make sure that they're comfortable13 with the idea.14 And to help to understand the15 site, we own about six acres immediately16 adjacent and wrapping around this site,17 and our site has been hampered in our18 ability to attract anybody to develop on19 it because essentially they'd sort of be20 buried behind this lot. We have a very21 limited amount of frontage on Ashton22 Road. So this acquisition really just23 squares off an industrial parcel we have24 and makes it consistent with some of the25 7 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 other industrial parcels and I think2 would yield some type of industrial3 activity that's consistent with the4 facilities around there. There's a large5 beverage distribution company immediately6 to the west. There's a company that7 specializes in martial arts equipment8 distribution throughout the United States9 immediately to the south, and some other10 companies related -- within sort of11 related industries, and I think that's12 the type of stuff we'd see. But, no, we13 haven't reached out to the community14 because, as you say, we don't have a15 project for anybody to react to.16
Right.17 Understandably.18 Any other questions from19 members of the Committee on this20 particular bill?21 (No response.)22
Anyone else23 to testify on this bill?24 (No response.)25 8 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1
There being2 none, Mr. Carter, please read the title3 of the next bill.4 Thank you very much.5
Bill No. 110650, an6 ordinance authorizing the Commissioner of7 Public Property, on behalf of the City,8 to acquire the beds of certain portions9 of Delaware Avenue and Buckius Street,10 under certain terms and conditions.11 (Witness approached witness12 table.)13 DEPUTY COMMISSIONER HERZINS:14 Good morning, Chairman Clarke and members15 of the Committee on Public Property and16 Public Works. I am John Herzins, Deputy17 Commissioner of the Department of Public18 Property, here today to testify in19 support of Bill No. 110650.20 This bill will enable the City21 to acquire property to assist the Streets22 Department with the opening of unopened23 portions of Delaware Avenue in accordance24 with Bill No. 110704.25 9 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 I note that an ordinance for2 the acquisition of the parcels for the3 extension of Delaware Avenue was enacted4 in 2008. However, the Eminent Domain5 Code requires a declaration of taking for6 condemnation to be filed within one year7 of the authorizing ordinance. Therefore,8 this new ordinance is required in order9 to commence with condemnation.10 The Department supports this11 measure, and I respectfully ask that City12 Council approve Bill No. 110650. I am13 requesting a suspension of the rules so14 as to allow first reading at the next15 session.16 Thank you.17
Thank you.18 Let the record reflect that19 Councilwoman Donna Reed Miller has joined20 the Committee.21 Any questions of this witness22 on this particular bill?23 (No response.)24
There being25 10 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 none, anyone else to testify on this2 bill?3 (No response.)4
Bill No. 110669, an8 ordinance authorizing the Commissioner of9 Public Property, on behalf of the City of10 Philadelphia, to convey a parcel of land11 with the improvements thereon, located at12 921 through 27 Ellsworth Street, under13 certain terms and conditions.14 DEPUTY COMMISSIONER HERZINS:15 Good morning, Chairman Clarke and members16 of the Committee on Public Property and17 Public Works. I am John Herzins, Deputy18 Commissioner of the Department of Public19 Property, here to testify in support of20 this bill.21 A request for proposals was22 issued by the Office of Housing and23 Community Development for the development24 of the above-referenced parcel of land25 11 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 into a low-income senior housing2 facility. St. Maron's CDC and BCM3 Affordable Housing are the joint4 developers that were selected in this --5 as a result of the RFP.6 The Department supports this7 measure and, accordingly, I respectfully8 ask that City Council approve Bill No.9 110669. I am requesting a suspension of10 the rules so as to allow for first11 reading at the next session of Council.12 Thank you.13
Thank you.14 For the record, what Council15 district is that in?16 DEPUTY COMMISSIONER HERZINS:17 Councilman DiCicco.18
DiCicco,19 okay. Just keeping track on where all20 the housing development is going.21 COUNCILMAN DiCICCO: We have22 this --23
I've been24 accused that --25 12 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 COUNCILMAN DiCICCO: We have2 this running debate as to what district3 has more development. I will say with4 the announcement of the North Broad5 Street Master Plan, if not now, you6 probably will have more going forward.7
At this8 point, it's all speculative.9 COUNCILMAN DiCICCO: I have10 confidence.11
Thank you.12 Thank you.13 Any questions of this witness14 on this particular bill?15 (No response.)16
Anyone else17 to testify on this bill?18 Mr. Ali.19 (Witness approached witness20 table.)21
Good morning,22 Chairman Clarke and other members of this23 Public Property and Public Works24 Committee. I am Jihad Ali. I'm here on25 13 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 behalf of the Contractors Roundtable,2 which is an African American group of3 contractors and general contractors, both4 Latino -- and subcontractors -- and5 African Americans. I'm also here as a6 representative of the Guardian Civic7 League, which is the Black Police8 Organization of Philadelphia, which has a9 real estate development committee.10 By way of disclosure, I'd like11 to say I'm an independent journalist for12 the Guardian Civic League. I'm a13 certified producer for public access TV,14 and I am going -- we are currently doing15 a report on this Public Property whole16 industry.17 I'm here on behalf of Bill18 110669. I'm not sure if 110535 is19 attached to this bill.20
No. What21 happened, they're actually the same bill.22
669,25 14 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 correct.2
Mr. Chairman, I have3 some questions about Public Property,4 because when this issue of Public5 Property documents conveyances comes6 before the people, the representatives of7 the people, sometimes it's a big8 question.9 By way of respect and by10 Councilman DiCicco's office, because I11 know that he has a concern that if a12 person has a problem, at least to give13 him the courtesy to respond. I went to14 the Chief Clerk's Office to obtain15 whatever might be in the file concerning16 this document, this bill. In the file17 was a one-page document that listed that18 this was being given to a developer. I19 then went to Councilman DiCicco's office20 to get some assistance and find out who21 was the identity of the developer and22 exactly what were their plans in terms of23 economic opportunities for contractors,24 both Latinos and African Americans.25 15 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 Councilman DiCicco's office2 helped me tremendously, but all they3 could provide me was just one name of the4 developer, who was identified as Joe5 Keller or something.6 COUNCILMAN DiCICCO: Joe Kater,7 K-A-T-E-R.8
Thank you,9 Councilman.10 I then went over to PAID,11 because originally I thought according to12 the other bills, it was mentioned that13 PAID was involved in it. I attended the14 Board meeting yesterday at PAID. I spoke15 to Mr. Deegan and the Chairman, who have16 always gone out of their way to assist me17 and giving me information, and they18 didn't know anything about this, because19 they said it might not have been before20 them before, but now I understand.21 The question I had was, on22 this -- the reason I'm here today is23 because there is a lack of information,24 and I know that this Committee and this25 16 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 Council has gone out of their way to2 provide transparency on everything3 concerning the City. So why is it that4 when it comes to Public Property,5 documents aren't available? There's6 nothing in the file.7 Questions that a citizen like8 myself might ask is, is there a public9 file available at Public Property for10 inspection? The conveyance of this11 parcel, is this contingent on this12 property being developed exclusively as13 elderly housing? And what is the14 purchase price of this parcel? And will15 the recipient of this parcel have16 assignment rights? And will a HUD-1 or17 1-A settlement sheet be required on this18 project, and is that available for public19 inspection?20 That's the questions that I21 have for OHCD -- I'm sorry; for Public22 Property. For OHCD, I don't know, is23 there a representative of OHCD here24 today?25 17 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1
I do not2 see the usual suspects, so I do not3 believe so.4
In regards to OHCD,5 the bill says that this was advertised.6 The question is, how was it advertised?7 Their website normally says that they8 advertise in five newspapers. The9 closing date of this bill advertisement I10 believe was in August. About 18 days11 later it closed. I'd like to know how12 many respondents it was.13 And in regards to the CDC that14 was chosen, along with the BCM developer,15 who is the BCM developer? What has been16 their past performance in regards to17 minority businesses in the City of18 Philadelphia, and what is the experience19 of BCM in elderly housing? And also has20 the developer submitted an application at21 PHFA for funding in the 2012 application22 process?23 If the developer is here today,24 my questions I would ask him is, did he25 18 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 advertise for MBE participation on his2 project at the time that he was3 soliciting responses for this parcel?4 And has he submitted an economic5 opportunity plan, as approved by the City6 of Philadelphia, not a plan in lieu of7 that plan, which is normally the8 procedure at OHCD.9
Councilman10 DiCicco.11 COUNCILMAN DiCICCO: Yeah. I12 think Mr. Herzins probably has some of13 the answers to your questions. Mr. Ali,14 as you know, I will do my best to arrange15 a meeting with you and Joe Kater, who is16 the -- I believe his title is Executive17 Director of the CDC.18 This project came about several19 years ago as a result of a conversation I20 had with the Monsignor of St. Maron's,21 who recently passed away, about creating22 opportunities in our neighborhood for23 low-income, affordable senior housing.24 This CDC is new. They don't have the25 19 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 experience of development. I'll be the2 first to tell you that. But I know that3 there was -- they were in front of the4 Zoning Board to get a variance, because5 it is currently a City public parking6 lot. So they needed to get a variance to7 create residential housing there. So8 there was a public notification as to9 that.10 Some of the other things I11 don't have an answer for, but I'll12 certainly work with you to schedule that13 meeting to talk to the CDC folks and then14 take it from there.15
That's fine.16 Councilman, your word means something to17 me. We can include that.18 COUNCILMAN DiCICCO: I just19 went into my office. They said you were20 there, so I figure I'd see you up here.21
First, let23 me for the record reflect that Councilman24 James Kenney has joined the Committee.25 20 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 Mr. Herzins.2 DEPUTY COMMISSIONER HERZINS:3 Councilman, I just wanted to actually4 distribute to the Council the economic5 opportunity plan that was developed for6 this project.7
Okay.8 DEPUTY COMMISSIONER HERZINS: I9 think one of your questions, sir, was the10 price of this. This is a nominal11 transaction due to the senior affordable12 housing project involved.13
Will the developer14 have assignment rights?15 (Audience member speaking16 without microphone.)17
Excuse me.18 Do you want to have this for the record?19 DEPUTY COMMISSIONER HERZINS:20 Right. We have --21
I mean, if22 we have people that are going to testify23 or respond to questions, we need them to24 come up.25 21 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 DEPUTY COMMISSIONER HERZINS:2 The agreement of sale will be limited to3 the development of this particular4 project.5
Okay.6 DEPUTY COMMISSIONER HERZINS:7 It won't move forward if this project8 does not develop.9
Okay.10 DEPUTY COMMISSIONER HERZINS:11 There'll be language in the agreement of12 sale to that effect.13
And the14 participation goals will be based on OHCD15 and the traditional Community Development16 Block Grant requirements --17 DEPUTY COMMISSIONER HERZINS:18 Yes.19
-- as it20 relates to contracts and personnel and21 certain requirements as it relates to22 income standards for the residents of the23 development?24 DEPUTY COMMISSIONER HERZINS:25 22 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 Yes.2
All right.3 I know we've done this a number of times4 in property conveyance. I know you've5 done it I know at least in my district6 and I'm assuming in other Council7 districts. The information, is that8 normally provided? Because I think9 normally we have a representative from10 OHCD here.11 DEPUTY COMMISSIONER HERZINS:12 We tried, but their previous commitments,13 no one was able to attend. I had14 requested that they attend.15 COUNCILMAN DiCICCO: Point of16 information. I know some of them are17 actually probably in my office, because I18 have an 11:30 meeting with them on some19 other matters. Deborah is there and two20 more, and I'm not sure who else.21
If you22 would like, I will try to arrange -- I23 think the next bill may not be24 necessarily lengthy, but somewhat25 23 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 lengthy. Mr. Jihad, if you want me to2 try and reach out and see if we can get3 someone here before we conclude our4 business today.5
Well, I'd like to6 take Councilman DiCicco up. He's been a7 gentleman to me throughout his career.8 He's always followed up on everything9 that I've asked him and he's always been10 honest, and all I want is honesty.11 I'd just like to say this12 entire Council -- see, you've always13 lived by that transparency. If I go to14 any one of your offices, I can get15 anything that I ask. People are always16 acceptable to me. The problem is when17 you deal with these agencies like OHCD.18 When they deal with you, it's a lot19 different than they deal with the average20 citizen. And I'd just like to follow the21 example of the other great leaders that22 I've had in my life, like Dr. King, who23 gives me the courage to come down here24 and speak before this powerful body, and25 24 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 it's only because I have that courage2 that we can talk about a problem that3 exists, which is the lack of information4 for the everyday citizen.5 Thank you.6
Thank you,7 Mr. Ali. You've been very helpful to us8 in your due diligence on this matter.9 Thank you.10 Anyone else to testify on this11 bill?12 (No response.)13
Thank you14 very much.15 Mr. Carter, please read the16 title of the next bill.17
Bill No. 110517,18 an ordinance authorizing the Commissioner19 of Public Property, on behalf of the City20 of Philadelphia, to enter into a lease21 agreement with the Philadelphia Municipal22 Authority for a certain portion of a23 parcel of ground located at the Northeast24 Water Pollution Control Plant, 389925 25 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 Richmond Street, Philadelphia,2 Pennsylvania; all under certain terms and3 conditions.4 DEPUTY COMMISSIONER HERZINS:5 Good morning, Chairman Clarke and members6 of the Committee on Public Property. I7 am John Herzins, the City's Deputy Public8 Property Commissioner, here today to9 testify in support of Bill No. 110517, a10 companion bill to Bill No. 110518, which11 had a hearing before the Committee on12 Finance on October 18th, 2011 and was13 reported out favorably.14 This bill will authorize the15 City to enter into a site lease for16 certain property at the City's Northeast17 Water Pollution Control Plant with the18 Philadelphia Municipal Authority. The19 site lease will facilitate the20 development, lease and maintenance of a21 biogas cogeneration facility proposed at22 the site that benefits the Water23 Department. The term of the proposed24 site lease is for a period of up to a25 26 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 total of 29 years. The City will operate2 the biogas cogeneration system to produce3 electricity and heat that will be4 utilized completely at the Northeast5 Water Pollution Control Plant. The6 agreements will also permit the Water7 Department to acquire the biogas8 cogeneration system at the end of the9 lease term.10 The Authority will enter into a11 site sublease with the proposed facility12 owner/lessor, Banc of America Capital13 Corp. The Authority will also enter into14 agreements to be authorized through Bill15 No. 110518 with a project developer,16 Ameresco, Inc., and Banc of America17 Capital Corp. The construction general18 contractor is Philadelphia-based A.P.19 Construction, and Philadelphia-based20 Northeast Energy Systems will be21 providing the General Electric generation22 equipment.23 Under the proposed schedule,24 the project will be completed and the25 27 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 lease payments will begin in 2013. The2 project must commence this calendar year,3 2011, and be completed by the end of 20144 to qualify for significant tax advantages5 which reduce the cost of the facility6 lease payments.7 The Department supports this8 measure and, accordingly, I respectfully9 ask that City Council approve this bill,10 and I am also requesting a suspension of11 the rules so as to allow for the first12 reading at the next session of Council.13 Thank you.14
Water15 Commissioner, why don't you just put your16 testimony in before we ask questions.17 (Witness approached witness18 table.)19 COMMISSIONER NEUKRUG: Good20 morning, Chairman Clarke and members of21 the Committee. I am Howard Neukrug, the22 City's Water Commissioner. I'm here23 today to testify in support of Bill No.24 110517.25 28 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 At the heart of the bill is the2 authorization for the City through the3 Department of Public Property to lease4 land located within the City's Northeast5 Wastewater Pollution Control Plant to the6 Philadelphia Municipal Authority for the7 construction and operation of a highly8 innovative, green and cost-saving9 project. This project will use waste10 biogas, which is a by-product of our11 treatment processes, to cogenerate both12 heat and power in the form of13 electricity. This biogas cogeneration14 facility will provide almost six15 megawatts of electricity, enough to16 displace 85 percent of the plant's17 electric demand. It will save us money,18 $20 million of the 16-year life of this19 agreement, and will continue to save20 money for decades to come. It will21 create a renewable energy source for22 Philadelphia and be a jobs generator23 during these difficult times.24 This project is just one part25 29 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 of a larger energy strategy to diversify2 our energy sources and reduce our overall3 risk to the volatile and uncertain energy4 markets. We have already installed 1,0005 solar panels and are exploring sewer,6 geothermal power, recycled airport7 de-icing fluid, food waste biogas8 generation and algae biofuels.9 As Water Commissioner, one of10 my priorities is to fully exploit these11 resources, converting our wastewater12 pollution control plants into innovative13 resource recovery facilities for our14 region. This project sets us on this15 path.16 I must also provide value and17 benefit to the community and our18 customers. It is for that reason that19 the Department has designed the cogen20 system to minimize noise and21 environmental pollution and to make it as22 durable a capital asset able to provide a23 positive return on investment even after24 the lease runs its course.25 30 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 This facility is also designed2 to be operated by the employees of the3 City of Philadelphia Water Department at4 the Northeast Plant.5 This cogen facility will be6 expensive to build, and while we may have7 considered moving forward with this8 project under a more typical public works9 approach, there are certain tax10 advantages set forth in the American11 Recovery and Reinvestment Act of 2009,12 also known as the stimulus bill, that13 makes this current opportunity so14 critical and timely.15 The Act provides the City a16 unique opportunity to use an alternative17 financing structure, which saves us $1218 million. Regrettably, the time needed to19 finalize this complex agreement and embed20 it within this bill and meet the stimulus21 bill's deadlines leaves us with a sense22 of urgency for approval from this23 Committee and Council.24 In conclusion, I respectfully25 31 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 request that this Bill 110557 be amended2 with a correction in text and a revised3 Exhibit "A" and that the Committee4 approve this bill and suspends its rules5 so that the bill may be read at the next6 meeting of City Council.7 This project is a winning8 proposal. It saves money, reduces9 greenhouse gas emissions, it creates10 jobs, promotes energy independence, uses11 an underutilized resource, is a big step12 in meeting the Mayor's Greenworks targets13 and diversifies the City's energy14 portfolio.15 I'm happy to take questions.16
Thank23 you, Mr. Chairman.24 I was looking at the revised25 32 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 exhibit. Can you kind of explain what2 the revisions are? Is there anything of3 real note or is it technical?4 (Witness approached witness5 table.)6
I see,7 you need the St. Joe Prep guy up there.8 I note that for the record.9
I'm Barry Davis.10 I'm with the City's Law Department.11 The change in the exhibit to12 the bill is to -- it was actually to make13 it more generic. We are negotiating14 these documents with the other parties at15 this time, and the original exhibit that16 was provided for this bill back in June17 when it was introduced is not necessarily18 consistent with some of the conditions19 that we're negotiating currently. So the20 idea was to keep it a very generic --21
Okay.24 All right. Thank you.25 33 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1
And the technical2 correction in the bill was that it was3 originally misworded, so the --4
Thank you,8 Councilman.9 Mr. Davis, since you're up10 here, we have had conversations over the11 last year about generation of power12 utilizing municipal facilities. Is this13 the one that we talked about in our14 conversations during the course of the15 Energy Authority?16
This is certainly17 one of the major projects that we18 anticipated and have been working on for19 quite some time. I should note that one20 of the conditions of the agreements that21 we'll enter into is that this will be22 fully assignable from the current23 Philadelphia Municipal Authority to an24 energy authority if the City desires to25 34 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 consolidate energy projects at the Energy2 Authority.3
Okay.4 Great.5 Any other questions of these6 witnesses at this time on this particular7 bill?8 (No response.)9
There being10 none, thank you very much.11 COUNCILMAN DiCICCO: I'm sorry.12
Councilman13 DiCicco.14 COUNCILMAN DiCICCO: I was not15 at the Finance Committee hearing, so I16 don't know too much about this, but17 through conversations with other folks,18 this company was the low bidder that is19 going to build this, correct?20 COMMISSIONER NEUKRUG: That's21 correct.22 COUNCILMAN DiCICCO: Are there23 any contingencies that would bring this24 matter back to City Council if for some25 35 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 reason the costs of the project were to2 exceed what was originally agreed to?3 COMMISSIONER NEUKRUG: At that4 present, there are not.5 COUNCILMAN DiCICCO: And is6 that normal -- I guess the question I'm7 asking and I'm making a statement at the8 same time. That's pretty normal the way9 we do things; traditionally we don't have10 any contingencies?11 COMMISSIONER NEUKRUG: As I12 understand it, yes, but I'm willing to13 sit down and talk with you and other14 Councilpeople about that.15 COUNCILMAN DiCICCO: And if16 this bill doesn't get voted out today,17 does this put the project in any -- is it18 in jeopardy?19 COMMISSIONER NEUKRUG: We are20 under a very tight timeframe. December21 31st is the absolute deadline for this22 project to have a full agreement and to23 have broken ground. So, yes, it is a24 very tight timeframe and --25 36 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 COUNCILMAN DiCICCO: It's2 tight, but if it were held today to the3 next Public Property Committee hearing,4 which I think we're going to have one5 more, I think there's another one6 scheduled --7
I'm not8 sure.9 COUNCILMAN DiCICCO: In any10 case, we'd have to get this done by11 December 15th.12 COMMISSIONER NEUKRUG: Yes. I13 think there may be other opportunities14 beyond this Committee to sit down,15 discuss and then have changes if --16 COUNCILMAN DiCICCO: That does17 concern me a little bit. I'm not a18 lawyer. I don't know how we do that. If19 we vote it out favorably, whether there's20 a suspension or not, how do we interject21 language that would cause this to have to22 come back to City Council in the event23 that there is some overages that were not24 anticipated when they actually did the25 37 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 bid?2
Councilman, the3 concept of coming back to Council I think4 presents some problems. The issue is5 that this project will be constructed on6 the City's site clearly for the benefit7 of the City's Water Department. It will8 be paid for through lease payments to a9 bank, which is going to be the owner of10 the project. It will -- the timing of11 coming back I think presents some12 problems in that we would come back at13 sometime in 2013 perhaps when the project14 is nearing completion and have determined15 that there were some cost overruns at16 that point.17 I think the practical problem18 of that is that how do the other parties19 to the agreement get assurances that in20 fact they will get paid if there is, in21 effect, a --22 COUNCILMAN DiCICCO: To that23 point, I mean, if in 2013 there were some24 cost overruns, the parties would be the25 38 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 Water Department and the developer. It2 wouldn't -- City Council would not be a3 party to that.4
That is correct.5 COUNCILMAN DiCICCO: And that's6 what I'm trying to get to. My7 understanding is, in other jurisdictions8 there are certain levels of overruns when9 you hit a certain number, whether it's 1010 percent, 20 percent, whatever, that would11 cause the developer to have to come back12 to the legislative body to get approval.13
One of the18 things about working in the private19 sector, I do get criticized sometimes for20 being in the private sector, but the21 things that you learn in the private22 sector bring benefit to your public23 service work.24 The way it works in the private25 39 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 sector between design and development is2 that the owner, the client, will make a3 determination between the design team and4 the contractor whether or not to accept5 that change order, which increases the6 cost. Who on this project is the City's7 client rep to argue with the contractor8 and/or the developer as to who is at9 fault for the cost overrun?10 For example, if a set of11 chillers is determined by the GC or by12 the project manager they need to be moved13 300 yards, there's a redesign cost and a14 cost of moving that. Under15 private-sector circumstances, the owner16 of the project would say, Whoa, that was17 not in the design, that's yours to eat,18 I'm not eating it, or there would be some19 dispute mechanism. The issue with20 government is is that who is the project21 management oversight for the City, for22 the taxpayer, and that's where the23 dispute comes in. Because once the24 project is down the road, if there's no25 40 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 mechanism to say, Wait a minute, what is2 that, why did it cost that and why are we3 eating it as opposed to you eating it,4 then we get to the end of the project and5 it's three, four, five million dollars6 over budget, who then determines whether7 we pay them that extra money?8
So the construct is9 that this is a firm fixed-price contract.10 The Water Department -- this is actually11 a project that would be done through the12 Philadelphia Municipal Authority, but, in13 effect, the Water Department will be14 assuming the responsibilities of the15 Authority. The Authority will have the16 direct oversight in terms of any proposed17 changes to the contract, change orders18 that would be part of that.19
But take no20 offense to this following statement: In21 the private sector, if I'm the developer,22 it's my money and I will decide whether23 or not, through a discussion, whether or24 not I agree with the assertion that it's25 41 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 a valid change order and I will agree to2 eat that or I will say to either the GC3 or the design team, the architecture4 firm, That's your problem, you left that5 out of the drawing, dude. I mean, we're6 not paying that.7 In this particular situation,8 it's the Water Department itself with a9 project that they want to get done10 saying, Maybe you'd be more likely to11 approve the change order as opposed to12 not if it was your own money.13
Yeah. I mean, I14 certainly see your point, and I think,15 though, that it is the -- that is16 essentially the way every public works17 project is done, and for better or for18 worse, the way that those projects are19 bid is that you are bidding a20 specification that is in front of you and21 to the extent that there needs to be a22 change because the specification did not23 anticipate a particular problem that --24
The25 42 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 question is, whose fault that is.2
That's the4 question, whose fault is it. Is it left5 out of the design documents or it's6 something that we couldn't foresee, it's7 got to be done --8
Well, actually,9 there's a slight advantage in this case,10 and, that is, that the developer here is11 assuming design and construction12 responsibility.13
So they are going16 to eat everything, except something that17 would be truly, truly unanticipated.18
I mean, but19 there's not -- during the Convention20 Center expansion, there was one person21 who was paid by the Center, who was the22 client, to follow all those issues and to23 make that argument, Yes, I see your24 point, we'll eat it; no, you left this25 43 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 curtain wall out and now you want to put2 it back in and you should have put it3 back in in the original design. That's4 the dispute that is -- the decision of5 who pays the mistake, and I don't know6 whether or not, as Councilman DiCicco7 raised, who pays for the mistakes in the8 end is the taxpayer.9
I'll give you an10 example of where this could come up, you11 know, in terms of this being a firm12 fixed-price contract. The type of13 unforeseen circumstance might be that14 we're building a foundation for the15 project and let's say that we, in the16 course of the excavation of that17 foundation, we determine that the soil18 there is unstable, that they are19 unanticipated in a way that is different20 than other soils on the site.21
So you're22 saying it wouldn't be the responsibility23 of the site civil engineer?24
What I'm saying is25 44 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 that the condition that exists on our2 site, on our land, would not have been3 knowable by the contractor at the time4 that he bid on this project. So that5 might be the kind of thing that would6 fall into a completely unanticipated --7
I'll go8 back. My only concern is that if it's my9 project and I'm financing it privately10 and I'm paying for it, I'm going to have11 a much stronger response to those12 requests than the government generally13 would, because, "Just do it." And I14 think that's the issue.15 We don't have a Capital Office16 that operates like a private development17 project manager would. That's --18 COMMISSIONER NEUKRUG:19 Councilman, the Philadelphia Water20 Department does have a Capital Office21 where we do approximately $150 million22 worth of work a year and we have a very23 strong group of engineers and inspectors24 and oversight, and we do run into in25 45 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 public works, unfortunately, issues of2 cost overruns and project changes almost3 on a weekly basis. So, yes, I understand4 your concerns.5
Finally, I6 will tell you the experience that I have7 in the private sector in New Jersey is8 that if a school board authorizes the9 construction of a high school and over10 the course of that construction, there's11 an aggregate increase in overrun to 2012 percent, they need to come back. Almost13 every school district in the State of New14 Jersey, you have to come back to that15 district and get the approval by16 resolution of the district.17 So, I mean, if that's a model18 that they use -- and it can be19 problematic from a development20 standpoint, but also I guess the taxpayer21 feels that -- the school district22 taxpayers feel that they are being at23 least looked after. That's, I think, the24 point the Councilman was making.25 46 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 Thanks. I'm sorry. I didn't2 mean to interrupt.3 COUNCILMAN DiCICCO: No.4
For the7 record, I should know this at this point,8 but I don't. When we say "cogeneration,"9 boy, that's a pretty broad statement.10 There's windmills, there's solar. Could11 you describe just for the record what12 exactly you plan to build there?13 COMMISSIONER NEUKRUG:14 Certainly, and thank you for that15 question. And, no, we're not chasing16 windmills here. We are looking at a17 project that uses pretty much a diesel18 engine technology, so a pretty simple19 technology, but on a very large scale.20 Instead of diesel fuel, we're using gas21 that's produced at our wastewater plant22 as sort of -- it's a methane product,23 similar to what you find at a landfill24 where they're collecting methane gas.25 47 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 Well, our process, as you can imagine,2 produces plenty of methane. Right now we3 use some of it for just heating our4 system and using it for raising the5 temperature in what we call our6 digesters. But, unfortunately, we only7 use a portion of it, and if you drive by8 I-95, you'll see that there's quite a bit9 of gas that's flared off from our10 wastewater plant. That is a waste of11 energy.12 So instead, we take this waste13 gas, we put it through a diesel engine,14 we generate electricity through that15 process and as a by-product of that16 process, we are producing heat, just like17 a car engine would produce heat, and we18 take that heat and we use that for our19 buildings and for our processes. So20 we're taking one fuel and generating21 two -- cogenerating two processes out of22 it, electricity and heat.23
When you24 say -- maybe it was just a way to25 48 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 describe it -- diesel engine, it's not2 really a diesel engine, because diesel3 engine needs diesel fuel --4 COMMISSIONER NEUKRUG: Right.5
-- to6 operate.7 COMMISSIONER NEUKRUG: Right.8 I was doing something very similar to a9 diesel engine that uses an alternative10 fuel, which in this case is waste gas11 from our process.12
That's fair.13 COMMISSIONER NEUKRUG: Very big14 green project.15
The last16 question is, what will the neighbors,17 what will the commuters, what will the18 community see after the project -- what19 will be different then than today?20 COMMISSIONER NEUKRUG: You will21 not see the flaring of the gas hopefully22 most of the time. You will not -- we are23 building and part of the design for this24 facility is to build a municipal-style25 49 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 facility that is a pretty large structure2 similar to the other facilities at the3 Northeast Wastewater Plant that will4 house this equipment and protect the5 community, particularly with the6 placement and the type of building that7 we're constructing, protect the community8 and any possible passerbys from any9 adverse noise or appearance of this10 facility.11
Could you12 supply to the Chair a rendering of what13 the site will look like?14 COMMISSIONER NEUKRUG: I'd be15 very happy to, yes.16
Two-story17 building, three-story building,18 five-story building?19 COMMISSIONER NEUKRUG: It's20 approximately --21
It's basically like22 a large garage. It will be constructed23 out of brick and concrete, and it has24 some pollution control equipment on the25 50 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 top of it that --2
Thank you,11 Councilman.12 Councilman DiCicco, are you13 done?14 COUNCILMAN DiCICCO: Yes.15
Any other16 questions for these witnesses from17 members of the Committee?18 (No response.)19
Anyone else20 to testify on the bill?21 (Witnesses approached witness22 table.)23
Please24 identify yourself for the record and25 51 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 proceed.2
Councilman, my3 name is William Martin, the Fox4 Rothschild Law Firm. I'm here on behalf5 of Ameresco, the developer on this6 project, and while I'm joined by Linda7 Nugent, the Senior Project Developer, and8 Lee Norelli of A.P. Construction, I'm9 here to just address the narrow issue of10 the timing of the transaction. If11 members of Council would separately have12 any other questions of either Ms. Nugent13 or Mr. Norelli, we can bring them up.14 Councilman DiCicco previously15 raised the issue of timing, which I16 wanted to address. As was indicated,17 there is a significant federal tax credit18 associated with this transaction, which19 under the requirements of the Stimulus20 Act only is able to be enjoyed if certain21 steps are taken during Calendar Year22 2011, and among the steps that are23 required are the commitments by the24 developer to purchase materials and to25 52 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 make irrevocable commitments as to2 materials up to an amount of 5 percent of3 the cost of the project.4 So as Council currently stands,5 given the schedule, perhaps this6 ordinance would be approved at a meeting7 that would occur in early November, and8 then the ordinances need to be signed by9 the Mayor, and it's only after the Mayor10 signs this and the companion ordinance11 that I'm in a situation where I can12 advise my clients that they can enter13 into legally binding commitments14 necessary to secure the tax benefits.15
Because the nature22 of the commitments that need to be23 entered into and then also there's a need24 to begin construction and --25 53 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1
So you have5 to have a shovel in the ground by the end6 of the year?7
Right. So in8 terms of the discussions we've been9 having with our clients, you know,10 certainly if we go back a month or two,11 we had hoped that the Council process12 could be concluded by the end of October.13 That couldn't occur for any number of14 reasons, and now we understand that the15 approval process, perhaps the signature16 of the Mayor, is now bleeding into the17 middle or latter part of November. But18 if there's much more significant delay,19 it puts the entire transaction at risk.20
Councilman21 DiCicco.22 COUNCILMAN DiCICCO: I don't23 suggest that there's going to be any24 significant delay. I think we may be25 54 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 talking about a week or two at the2 maximum. We'll get it done I believe3 even before the 15th. I don't think4 there's anyone who does not want to5 support this. I think it goes to the6 question of how do we give some7 protections or insurances that if there8 are overages, that those overages will be9 looked at by City Council in conjunction10 with the Water Department.11 So, again, I'm not the Chair of12 this Committee, but I think that13 everyone's intention is to get this14 passed, and there may be an amendment15 that reflects the issues that we brought16 up in terms of the overages.17
Thank you,18 Councilman. And my main purpose is to19 make clear that the window doesn't extend20 until the end of the Council session, but21 should be --22 COUNCILMAN DiCICCO: I don't23 think that's the case. I mean, I can't24 speak for everyone else, but that was not25 55 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 my intention when I asked the question or2 raised the issue. That certainly wasn't3 my intention. That's why I asked is this4 time sensitive, because I don't want to5 blow this thing up because we have one6 issue that we can't agree on.7
And I'll step down8 and if members of the Committee later in9 this hearing have any further questions10 of me or my clients, we'd feel happy to11 come back up.12
But just13 one issue on the -- and maybe you have to14 talk to your clients about this first15 before you can give an answer. The16 scenario that was spoken about in the17 last panel relative to this percentage18 aggregate of change orders that would19 need to potentially be approved,20 hypothetically, by a resolution of the21 Finance Committee, not by an ordinance,22 just so that there's some level of23 comfort that these change orders are, in24 effect, accurately our responsibility as25 56 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 a government and not the developer or the2 design team or the construction company's3 mistake.4
Certainly it's a5 valid concern, Councilman, but I think6 that it becomes very complicated because7 you have a third-party lender which is8 entering into commitments at this point9 to loan a certain amount of money based10 upon a credit assessment, and I think it11 warrants sort of broader and more12 detailed conversation than that that we13 can probably readily handle.14
But once15 these two pieces of legislation are out16 of this room, that conversation is more17 difficult to have, I would assume, or18 less likely to occur.19
Well, I don't20 think necessarily, Councilman, because I21 think the companion legislation approved22 documents which were in a form and23 substance that the Solicitor's Office24 deems appropriate, you know.25 57 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1
But is that2 issue discussed in that document approved3 by the Law Department, the issue of4 aggregate change order issues?5
I believe it is,6 but I would also defer to Mr. Davis'7 opinion on that, because he's probably8 closer to the document.9
All right.10 Thank you.11 Please identify yourself for12 the record.13
15 My name is Jihad Ali. 22 I'm here on behalf of Bill23 110517. 1 the record from Joan Schlotterbeck --2 excuse me if I'm mispronouncing her3 name -- from Public Property and also4 Howard Neukrug from the Water5 Commissioner. 9 Construction, that was chosen for this10 job. Through a series of initiatives11 that the Office of Economic Opportunity12 initiated at the beginning of this year,13 there was a series of meetings held14 throughout the City for contractors to15 come and talk to the community, so the16 African American contractors that I17 represent as well as contractors from18 John Macklin's organization, Minority19 Business Enterprise Council. P. was21 there. 1 comply with the law because they do give2 work to minorities, but when we,3 particularly us who are of the African4 American race, when we particularly5 looked at it, we saw that all their6 contracts went to maybe one or two7 Hispanic firms. 14 Because I don't really want to make an15 excuse for being pro black males. That's16 what I am. I don't want to just do well17 for myself. 1 Property or the Water Department, we're2 complying with OEO, we're in compliance,3 we're doing 40, 50 percent, when you look4 at the detail reports, you see that it's5 not African American men and women that's6 making this money. 16 A&P, it took us -- it took17 me -- let me give a direct testimony. I18 requested from OEO. Ms. Burton, who I've19 testified on numerous occasions, she's a20 nice lady, but nice is not getting this21 job done for us. I asked for a meeting22 with A&P. It took me four months to get23 a meeting with them. They met with me in24 their office. 1 office, they introduced me to one black2 employee that I saw there at their3 office, and he was a recent hire from the4 Water Department with 35 years of5 service. So when I look around in their6 office and their staff, there's no young7 black kids, there's no trainees. 14 So the issue is, A&P, they talk15 a good game, but when you look at the16 final results, black males, men and women17 are not getting anything with A&P. When18 you look at minorities, minorities that19 they use, they utilize American Indian20 Suppliers out of New York. They're the21 only Indian supplier on that OEO22 database. They do $5 million a year in23 revenue. How is that benefiting the24 City? 2 So I'm here today to give you3 my direct testimony to tell you the4 reality of it. 10
Thank you,11 Mr. Ali.12 Any questions of this witness13 from members of the Committee?14 (No response.)15
Excuse me. I just19 wanted to make sure that Councilman20 Kenney's question had gotten answered.21 This was the question that related to22 whether or not the documents that are in23 negotiation currently have a cap on the24 cost overruns that could occur. There25 63 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 has not been to date a cap placed on2 those types of cost overruns. As I said,3 this was a firm fixed-price contract.4 The anticipation is that you don't have5 them, but it is certainly something that6 I'd be happy to talk with your office7 about and --8 COUNCILMAN KENNEY:9 Mr. Chairman, I wasn't -- and, sir, I10 wasn't looking for a cap. What I'm11 looking for is a mechanism to have some12 oversight or some discussion on why the13 20 percent aggregate number gets hit.14 The 20 percent aggregate number may be15 absolutely and totally justifiable and16 that's -- I mean, it could be even more.17 I mean, there are things that you run18 into that you don't anticipate. There19 might be somebody sues you and slows you20 down. I mean, all those -- whether the21 fault is at the fault of the owner22 because it's something that was23 unanticipated or it's a fault of someone24 providing the service is the dilemma, is25 64 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 the dispute in every construction2 development project known, is that any3 time it's more than it's supposed to be,4 whose fault is it and who is paying.5 So it's not a matter of a cap6 of 20 percent that we won't pay over a7 change order, but what is the discussion8 and mechanism when the aggregate 209 percent gets hit.10
All right. Thank11 you. I do want to make sure that the12 bill that is considered is the amended13 bill. So I think Commissioner raised14 that issue in his testimony, but I want15 to make sure that that is the bill that's16 before the Committee.17 Thanks.18
Thank you.19 Anyone else?20 (Witnesses approached witness21 table.)22
Councilman,23 William Martin, Fox Rothschild Law Firm.24 I think it's appropriate just25 65 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 to take a few minutes to respond to the2 prior witness's comments regarding the3 A.P. Construction and the EOP.4 First of all, I'd like to share5 with members of the Committee copies of6 the economic opportunity plan that has7 been approved in connection with this8 transaction. The Water Department has9 been insistent on the project since the10 bid process that respondents be sensitive11 to the policy concerns of the City12 relating to the economic opportunity13 plan. The plan was negotiated with the14 Water Department and the Office of15 Economic Opportunity.16 As I indicated previously, I'm17 joined by Linda Nugent, Senior Project18 Developer of Ameresco; Lee Norelli,19 Project Manager of A.P. Construction.20 I'd suggest Linda just briefly give you21 an overview of Ameresco and particularly22 a little bit of background on Ameresco23 and its commitment to diversity in its24 projects throughout the country, and Lee25 66 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 can talk a little bit about some of the2 work that has been done here already in3 connection with this project, including4 specifically contracting with one of the5 parties that was mentioned in the prior6 testimony as being the ones that are7 being ignored by A.P.8 Linda.9
Thank you very10 much. Again, Linda Nugent, Senior11 Project Developer for Ameresco.12 Ameresco is an independent13 energy services company. We've done14 about $5 billion in energy solutions. We15 have about 30 years of experience in16 these types of projects. We've developed17 and have operational 29 biogas projects.18 Twenty-three of these projects are19 electricity generation, six of these20 projects are pipeline projects.21 Ameresco has experience in22 doing specific projects directly related23 to this in our San Antonio water project.24 That was the first project of its kind.25 67 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 It takes 900,000 CFM of digester gas, and2 we deliver it -- and we clean it up and3 deliver it to the natural gas pipeline.4 It's a 20-year project.5 We also have a project with the6 City of Dallas that's quite similar to7 this project. It's a 4.3 megawatt8 cogeneration project. They use similar9 type GE reciprocating engines. They're10 internal combustion engines -- I know11 that question was asked earlier -- fueled12 on digester gas, powered -- the power and13 the thermal are used on site, similar to14 this particular project. They had annual15 savings of about 1.5 million.16 The majority of our other17 projects are landfill gas-to-energy18 projects, very much similar to the19 digester projects. We're taking the20 methane gas, using it in combustion21 engines, producing powers. We have22 projects ranging everywhere from 123 megawatt to 11.4 megawatt projects.24 We are committed to this25 68 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 project in terms of diversity. We do a2 lot of projects with the federal3 government. We have Housing Authority4 projects and others that require this5 commitment. We've been very successful6 in meeting these goals. We did submit7 our EOP plan, which was approved, that8 Bill has passed out to you. We've9 brought on board as our partner A.P.10 Construction, which is an established11 firm with -- a local established firm12 with a history of meeting its13 participation goals. Also, Lee will talk14 about that we've brought on Clark15 Resources for a third-party monitor for16 this project for the EOP, and we will be17 pushing A.P. to meet the 40 percent goals18 that are represented in the EOP.19
My name is Lee20 Norelli. I'm the Project Manager for21 A.P. Construction.22 I'd like to start off by23 emphatically stating I totally disagree24 with the --25 69 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1
One second,2 please. Councilman had a question.3 Councilman Rizzo.4
I wanted to5 ask a question with reference to your6 testimony. You mention the San Antonio7 project is going to put some of the8 product into the natural gas pipeline. I9 didn't hear any of that about our10 project. It sounds like we're going to11 be using everything that we provide. Is12 that fair?13
That's correct.14 You're taking the gas, we're putting in15 the engines and we're using the16 electricity, and then the thermal will be17 used on site. This is a different kind18 of project. The San Antonio, it requires19 much more clean-up, expensive process to20 then put it into the natural gas21 pipeline. It's unique in what they were22 doing there. Our City of Dallas project23 is more similar to what you're doing here24 at Philadelphia, where you actually have25 70 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 a high demand for the power used on site2 and can use the thermal on site.3
Will the4 design -- let's say that we have extra5 capacity. When the Water Treatment Plant6 was built in the 1970s, it was built with7 a lot of extra capacity, which turned out8 to be a big value to the City. We take a9 lot of the suburban waste into10 Philadelphia and we do pretty well, I11 understand, with that.12 But my question is, when you13 use the word "cogeneration," most people14 think that they're going to benefit,15 which they will because of the reduced16 cost to the City, but we're not really17 going to put anything back into PGW's18 hands or anything like that, correct,19 ever?20
But is there23 anything in the design that could24 eventually allow that?25 71 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1
Councilman, if I2 could interrupt. It's not provided for3 in the design. The design was as bid by4 the Water Department. And then also keep5 in mind that to do what you would suggest6 puts at risk and actually eliminates the7 possibility of this $12 million tax8 credit. The regulations -- the federal9 government regulations having to do with10 the tax credit require the energy being11 generated to be utilized there on site.12
Okay. It16 would be such a bad thing to make some17 money on this extra product, huh?18 Okay. That's all I wanted to19 hear. Thank you.20
Thank you.25 72 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1
My name is Lee2 Norelli. I'm the Project Manager for3 A.P. Construction.4 I heard Mr. Ali's testimony and5 strongly disagree. A.P. has historically6 for the past 54 years complied with all7 state, federal and local rules and8 regulations. We have reached out to the9 Contractors Roundtable, who Mr. Ali is a10 business agent. We have also reached out11 to the National Association of Minority12 Contractors, which is headed by13 Mr. Macklin, who I just recently became a14 friend on LinkedIn with. So we are15 trying.16 As Mr. Ali stated, we hired17 Mr. Credle, a 35-year City employee, who18 is retired from the Water Department, to19 join in the forces to engage more20 minority participation, especially in the21 African American community. We22 religiously meet all or exceed all goals,23 whether they be for the federal24 guidelines at the Philly International25 73 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 Airport, the School District of2 Philadelphia, here at the Water3 Department, the Streets Department, New4 Jersey DOT, PennDOT, et cetera.5 Prior to being awarded this6 contract, we went through scrutiny with7 Ms. Angela Dowd-Burton's office,8 especially Chevelle Harrison, an MBA --9 MBE Specialist II.10 We are here to welcome any11 business that is capable of complying to12 what we need to comply with, and that is13 cost and schedule.14 If I may address the concern of15 the change orders. Again, we religiously16 are in the public sector. And I saw17 Mr. Resta the other day with the18 Convention Center. I know what he's19 going through over there. But as a20 matter of course of business, here again,21 this Water Department prior to us even22 being, you know, eligible to compete on23 this bid, they engaged AECOM. They24 produced the design documents. They25 74 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 scrutinized those documents, as the2 lawyer for the Water Department stated.3 The foundation, it's on piles, you know.4 They did their soil analysis. So we5 don't foresee any large, if at all, any6 change orders, but we appreciate what7 your comment is, and my first -- my8 experience with the City of Philadelphia,9 Streets Department, Water Department,10 Airport, they do pretty good scrutiny and11 I got to give the employees of the City12 of Philadelphia, you know, great credit,13 because they scrutinize us pretty good.14 We don't walk around putting change15 orders in. As Mr. Clarke might know, we16 just completed the Kensington CAPA, a17 similar contract to this where we went18 out, we were given a set of parameters19 from the School District of Philadelphia,20 we engaged the bank for the financing, we21 engaged the design engineers, and we22 completed the job in less than 13 months.23 It's a magnificent school. That's a24 similar way that this job is getting25 75 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 approached.2 The Water Department engaged3 AECOM to do the initial design. They4 flushed out what could be sold back to5 PGW, what could possibly be sold to6 Philadelphia Electric. I talked to the7 doctor at the Water Department. Those8 were all weeded out prior to the RFP9 coming out. So --10
-- in the event12 of any change orders, the change order13 process would be similar to any other14 public works contract, although we are15 engaged by contract to take on the16 design. So we have to fight first within17 ourselves.18
And I21 appreciate everything you're saying, and22 this is not directed at A.P. Construction23 by any stretch. You're a great company24 and do great work all over the region.25 76 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1
You know4 the tension, you live the tension of the5 owner and the contractor --6
-- and the8 architects and engineers. It's a9 tension.10 Do you do work in New Jersey?11
So you're16 familiar with this 20 percent aggregate17 thing that they require?18
So you're20 also familiar with doing that, too.21 I think what the Finance22 Committee -- I'm not speaking for them --23 Finance Committee, that was the other24 day. The Public Property Committee and25 77 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 the Finance Committee questions had to do2 with what our responsibility is as our3 fiduciary responsibility as a body.4 Because we have, not this project5 specific, but overall our capital6 spending is really haphazard and just7 because of the unwieldy nature of the8 beast and all the different departments9 that have different -- I mean, everybody10 is doing something different -- that we11 thought it'd be responsible for us to at12 least, not, again, by approving it by13 ordinance, but approving it by resolution14 of a Finance Committee, similar to the15 finance committee of a corporation that16 would say, Okay, we're building this17 building, we understand the need to pay18 more or we understand your responsibility19 as we sign off on it. It's more a matter20 of form than it is a matter of substance21 with you specifically.22
Thank you,25 78 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 Councilman.2
Thank you4 so much.5 Anyone else to testify on this6 bill?7 (Witness approached witness8 table.)9
I just want to show10 you the renderings that you asked for and11 we have.12
My name is Paul15 Kohl. I'm an engineer with the16 Philadelphia Water Department, and I have17 the renderings that were requested and18 I'd like to be able to present them to19 you.20
Please put21 them up, sir.22 That's great response, sir, I23 must say.24
The bay doors are25 79 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 garage doors, effectively, which allow2 for mechanical access to the equipment.3 These engines are large, basically like4 train engines. They run on gas, and5 they're large block engines, and they6 come in and out those doors. And this is7 an aerial view of the facility itself.8 And my finger is pointing to the scum9 pad, which is where this facility is10 going to go. I don't know if anyone can11 see that from here, but this is it.12 These are the active digesters.13 This is the site. This is Castor Avenue.14 On the other side of 95 is Richmond, and15 this is the main plant as a whole, and16 all of this area is industrially zoned.17 (Indicating.)18
Yes, this will run21 24 hours a day, seven days a week. The22 building is built with noise attenuation23 components.24
Unlikely to25 80 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 be heard off site, right?2
That is correct. We3 must comply with the air management, and4 that's part of the permitting5 requirements, sound levels and pollution,6 and noise is part of the pollution7 analysis.8 COMMISSIONER NEUKRUG: And just9 for -- this is Howard Neukrug, Water10 Commissioner.11 Just for the record, this12 facility, Councilman Rizzo, you're quite13 correct, it looks like the facility, and14 it was designed that way. It was15 originally designed as a public works16 project, thinking that we would do this17 as another construction job at the City18 of Philadelphia Water Department.19 Because of the stimulus bill and other20 incentives and the alternative strategy21 of how to build, lease, operate this22 facility, we are here before you with23 this complex agreement. But at the end24 of the day, it's a Water Department25 81 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 project and will be on a Water Department2 site that the Water Department eventually3 will own and operate.4
Is there any5 extra special equipment or training that6 our firefighters would need in the event7 of some problem at this facility?8 (Witness approached witness9 table.)10 COUNCILMAN CLARKE:11 Ms. McCarty, please.12 MS. McCARTY: Debra McCarty,13 Deputy Commissioner of Operations.14 We work with the Fire15 Department with our facilities. They16 visit our facilities on a routine basis,17 and we show them anything new and make18 sure they know what is necessary, what19 hazards are at our facilities that they20 might have to deal with. So that happens21 on a routine basis. So, of course, we22 would pull them in on this.23
Ahead of24 time?25 82 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 MS. McCARTY: Yes. Yes. Yes.2
Not the day3 of an event.4 MS. McCARTY: No. It doesn't5 work too well that way.6
Thank you,10 Councilman.11 Any other questions?12 (No response.)13
Anyone else14 to testify on this bill?15 (No response.)16
There being17 none, we will now go into the public18 meeting.19 I call on Councilman Kenney for20 a motion on Bill No. 110632.21
Thank you,22 Mr. Chairman. I move that Bill No.23 110632 be reported out of the Committee24 with a favorable recommendation and a25 83 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 request made for rules suspension to2 allow for first reading at our next3 Council session.4 (Duly seconded.)5
It's been6 moved and seconded.7 All in favor?8 (Aye.)9
The ayes13 have it. Bill No. 110632 is voted out of14 Committee with a favorable recommendation15 and rules suspension to allow reading at16 the next session of Council.17 Councilman Kenney.18
Thank you,19 Mr. Chairman. I move that Bill No.20 110650 be reported out of this Committee21 favorably and a request made for rules22 suspension to allow for first reading at23 our next Council session.24 (Duly seconded.)25 84 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1
It's been2 moved and seconded.3 Those in favor?4 (Aye.)5
The ayes9 have it. Bill No. 110650 is reported out10 of Committee with a favorable11 recommendation and rules suspension as to12 allow reading at the next session of13 Council.14 Councilman Kenney.15
Thank you,16 Mr. Chairman. I move that Bill No.17 110669 be reported out of this Committee18 with a favorable recommendation and a19 request made for rules suspension to20 allow for first reading at our next21 Council session.22 (Duly seconded.)23
It's been24 moved and seconded.25 85 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1 Those in favor?2 (Aye.)3
The ayes7 have it. Bill No. 110669 is reported out8 of Committee with a favorable9 recommendation and rules suspension to10 allow reading at the next session of11 Council.12 We will now go back into the13 public meeting -- I'm sorry; the public14 hearing. Bill No. 110517 will be15 recessed until November 3rd, 9:00 a.m.16 This will give us an opportunity to craft17 whatever language that's required for an18 amendment to deal with this issue about19 overages, cost overruns, and we want to20 get a little bit of clarity on the21 participation. I understand that the EOP22 was submitted to the Finance Committee.23 Was it?24 COMMISSIONER NEUKRUG: Yes.25 86 10/26/11 - PUBLIC PROPERTY - BILL 110517, ETC.1
Which is2 why it wasn't a part of this package. We3 just want to get clarity.4 And then there's also one other5 issue. If there is an amendment to deal6 with any issues relating to the cost7 overruns, we want to make sure that it is8 amended in the appropriate committee, be9 it Finance or be it Public Property. But10 I just don't want in any way, shape or11 form to think that this is not something12 that we'll proceed. We feel that it13 obviously is much needed and a lot of14 people did a lot of good work. So I just15 want to make sure we have our16 housekeeping in order. So this bill will17 be recessed until -- 110517 will be18 recessed until November 3rd, 9:00 a.m.19 Thank you very much.20 (Committee on Public Property21 and Public Works concluded at 12:25 p.m.)22 - - -23 24 25 87 1 CERTIFICATE2 I HEREBY CERTIFY that the3 proceedings, evidence and objections are4 contained fully and accurately in the5 stenographic notes taken by me upon the6 foregoing matter on October 26, 2011, and that7 this is a true and correct transcript of same.8 9 10 11 12 --------------------13 MICHELE L. MURPHY14 RPR-Notary Public15 16 17 18 (The foregoing certification of this19 transcript does not apply to any reproduction20 of the same by any means, unless under the21 direct control and/or supervision of the22 certifying reporter.)23 24 25