Committee Hearing, March 13, 2002

2202 COUNCIL OF THE CITY OF PHILADELPHIA CONTINUED PUBLIC HEARING COMMITTEE OF THE WHOLE FY '03 OPERATING BUDGET - - - Room 401, City Hall Philadelphia, Pennsylvania March 13, 2002 10:00 a.m. - - - BILL 020001 - An Ordinance adopting the Operating Budget for Fiscal Year 2003. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK J. DI CICCO COUNCILMAN WILSON W. GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN W. THACHER LONGSTRETH COUNCILMAN RICHARD T. MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN BRIAN J. O'NEILL COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 (215) 561-2220 2203 BILL 020001 PAGE LAW DEPARTMENT NELSON A. DIAZ, City Solicitor ............... 2204 WILLIAM THOMPSON, Chair of Litigation ........ 2209 STELLA TSAI, Chair of Administrative Law ..... 2210 DONNA MOUZAYCK, First Deputy City Solicitor .. 2214 CHERYL GASTON, Chief Deputy, Code Enforcement 2229 DISTRICT ATTORNEY'S OFFICE LYNNE ABRAHAM, District Attorney ............... 2286 LEONARD DEUTCHMAN, Chief DA ................... 2319 CHARLES GALLAGHER, Deputy DA .................. 2352 DEFENDERS ASSOCIATION ELLEN C. GREENLEE, Chief Defender ............. 2390 ROBERT DUBOW, Budget Director ................. 2400 CHARLES CUNNINGHAM, First Assistant Defender .. 2404 2204 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

Good morning, everyone this is the continued public hearing regarding 020001. The first department to testify will be the Law Department. (Witnesses come forward.)

Good morning. Please identify yourself for the record and proceed with your testimony.

My name is Nelson A. Diaz, and I am the City Solicitor of Philadelphia. We have prepared testimony that we will submit to you for the record and dispense with having to read it. And we'll be available for questions. That way we can expedite the process. Essentially, since I have been before this Council just recently in the last couple of weeks and months, I think it will be helpful if we just submit it. We're talking essentially about an overall Law Department budget of about 17.5 million for FY '03, which is a net decrease of about 1.7 million. So we're not even asking for an increase. And we intend run a pretty tight ship that was run before our tenure, Madam President. 2205 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) And then you have the other parts of the departmental budget issues which also relate to the water, ground revenue, aviation, community development, and total funding of about 37 million for '02 which is a decrease of 1.3 million. And there's something that's not in the testimony that I want to take a little credit for since we're in the credit business these days. I just settled the Liberty case which was related to the Liberty Towers in terms of the transfer tax for 3.5 million, which will be added revenue for you in that case.

How much is that?

3.5 million.

Wonderful.

Which will hopefully be in your revenues within the next 30 days. And we're about to settle another one which we don't want to disclose, but that will be about another 1.5. We're in the process of working those figures out this week. So I'd like to take credit for a little bit that's happened in the couple months that I've been around. 2206 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) And as you know, during my predecessor's tenure, there was a major increase in outside counsel expenses and a lot of it had to do with many of the major issues of stadiums and Gas Works and so forth. As I testified in my previous testimony, I intend to try to keep that at a reduced rate as I promised when I had my confirmation hearings. As you can see, the amount will be about 6 million. We spent about 8 to 9 million a year in the last few years.

What did we spend for outside counsel in '01 and '02?

Before this Administration, it was in the average -- prior administrations in the average of to million. So we pretty much almost doubled in the last few years.

I'm sorry. You talked about previous administration.

Prior to the Street Administration. The history essentially, for example --

I'm not asking you about prior to the Street Administration. I am asking what was the cost for outside counsel for FY 2207 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) '01 and FY '02?

FY '01 was 5.5 million and '02 was million. And '03, we project 5 million. 5 One of the areas I assume that you had 6 some major interest in is the area that we intend to try to put some emphasis on in the coming year which relates to the code enforcement, particularly as a result of the legislation on NTI where we would hope that we would responsible as quickly as possible, not only to increase but to enforcement opportunities. And so we are attempting to manage that by hopefully reducing our case backlog in other areas as civil rights and labor employment cases that are pending so that we could deploy the lawyers into the code enforcement priorities as the demand becomes imminent. And I think generally that covers the total concept of the budget that we've submitted.

Thank you. Will the Law Department be impacted by the DROP Program?

I don't believe so.

People don't stay around long enough, huh? 2208 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

It's a good question because the tension between what we pay lawyers versus what they get in the private sector, we essentially then have this middle management lack of individuals with longevity and experience. And as a result, they tend to leave when they begin to cap out at more profitable areas since it becomes sometimes prohibitive work at these salaries.

In your testimony, you indicated that there will be a decrease of $1.7 million for outside counsel. Now, is that caused by the decrease of case load or is it a concerted effort on your part to keep as much work in-house as possible?

My first month on the job I eliminated a hundred thousand dollars in contracts for outside lawyers, people who were doing services for us. So it's an effort on my part to try to utilize the capacity and the capability of lawyers that we have and also to employ people who have the capabilities so that they can represent us instead of paying $400 an hour for services. You know, our lawyers get 40 to $80 an hour. So it's a difference in cost to the department. 2209 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

What is your budget for outside counsel for '03?

For '03 is 5.2 million.

And I think you indicated to me just a couple minutes ago that for FY '02 we spent 6 million and you say that we're saving 1.7 in '03?

That's correct.

It doesn't add up.

There's savings on other areas. For example, in the General Fund, we have a savings but then in the Water Fund we have an expense and in a Grant Revenue Fund we have an expense and in the Aviation we have an expense. So the offset of that gives you the 1.3.

Would you please explain the monitoring agreements related to the civil rights unit? Why do they end in September 2003?

I don't know.

For the record, I am William Thompson, Chair of Litigation for the City Law Department. The monitoring the agreements were 2210 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) the result of discussion between attorneys for plaintiff, the attorneys for our office, as well as the Court. And I believe it is in the process of those discussions and agreements reached among the parties that those dates were set for the end of those monitoring agreements.

Do you expect --

Excuse me, Madam President.

My name is Stella Tsai, Chair of Administrative Law. I notice in the testimony -- I was out for a few weeks. So it indicates that the Baby Neal litigation maybe subject to monitoring agreement. It is not subject to the monitoring agreement. It's reached its conclusion, so that is not subject to a monitoring agreement. And that's one the cases that's listed in the civil rights portion of the testimony. I just wanted to clarify that point. Thank you.

Thank you. Do you expect to dedicate more of your staff to handle the increased number of code violations brought forth by the NTI Program? And can you tell us what other units will be affected? 2211 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

I have Ms. Gaston with us who is the Chief Deputy for the area of enforcement. And she has done a tremendous job with regard to being current in those areas. And as a result, we have not determined at this point that we need tremendous additional resources. But we are projecting that once the enforcement activities begin, which is the demolitions and then the rebuilding and then the whole program on NTI and its concept becomes a priority that we will be forced to work in that area. One of the problems that we also have is we need additional priority also established by the Municipal Court. As we begin this general area enforcement and we will definitely need additional resources. And the way that I think that that I would like to deploy the lawyers is to try -- and what I'm doing now is developing and establishing a program with the federal judges. There are about 400 or 500 cases that are in the pipeline both in labor and employment and the civil rights. And if I can reduce the number of cases and resolve a number of those cases, I think that will free up some of our lawyers to be able to utilize them in other 2212 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) areas within the Law Department. And one of those priorities would be the area of enforcement. I don't know if Cheryl wants to add anything else to that.

Thank you. The Chair recognizes Councilwoman Brown.

Thank you, Madam Chair. First let me congratulate you on the recent win and savings that your office was responsible for with the settlement. And let me say thank you very much for the role you play annually in inspiring young people to pursue graduate education with regards to the Fatah Graduate Opportunities Conference. President Verna started a portion of her testimony addressing the decrease that your office has enjoyed this past year and you mentioned specifically stadiums and PGW as primary factors that contributed to that, the fact that we do not have them now, correct?

Well, the stadiums are pretty much a done deal and, therefore, I don't foresee any additional expenses generally. And I believe that 2213 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) whatever additional issues, we can do them in-house. At this point they were done by private law firms. The PGW is another story. I think there were expenses that were encumbered by that. I've hired someone who was an expert in both the area of EPA, environmental law, regulatory law, and spent 8 years in the Department of Energy. And I would hope 9 that the fact that I've added to the capacity of the 10 Law Department someone with that capacity would also 11 enable us to use less outside resources and expense 12 in the PGW area, but I don't think anyone can 13 predict what would happen with PGW between now and 14 the end of this year. 15 There were other areas of expenditures 16 that we were involved with in terms of Law 17 Department, which was the School District cases. 18 And as you know, the School District issues are now 19 being carried by the City Council. And therefore, I 20 believe that the expenditures that are going to be encompassing the challenges with regard to the School District issues will be carried by the City Council, therefore, I don't foresee myself spending any money in that area.

On the topic of the 2214 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) use of outside Council, it's my understanding -- my knowledge base is limited, but it's my understanding that large corporations now sell software to users of outside counsel as a way to contain cost in-house. Has your office explored this? If not, why not? If so, the outcome. What has the yield of those discussions, if any?

It's an excellent point. We're really backward in regard to the utilization and the capacity that we have with regard to the computers and the technology. And I committed to Budget Office that if I could save money on the employment area, if we could utilize some of those resources for the purposes of not only upgrading the computers but upgrading technology and giving us som technological capabilities that most of the law firms in this City have and we don't. I've attempted to ask both our Budget Office -- and I don't know if you want to add anything to that.

Yes. My name is Donna Mouzayck, First Deputy City Solicitor. We did review one outside package which was meant to monitor outside counsel billings. The cost, as I recollect -- this was about a year, a little more 2215 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) than a year ago -- was something like $80,000 per year going forward for the next three or four years. We were in the middle of negotiations and realized that we had some capacity in-house to do what the software was meant to accomplish without going through that expenditure. So right at the end of those negotiations, Chris Lane and myself began to design some in-house programs which would get us close to what they do. We were able to utilize our own 4D System to get the level of detail that we needed to better manage those cases. We also got our managers more involved so that on a monthly basis they are in contact with outside counsel and provide us up-to-date status. We also have built into our contract guidelines instructions to our outside counsel telling us that we want to see copies of everything, things of that nature, so that we can better monitor those programs. So between our own in-house computer program and our own in-house manpower, we maybe aren't doing everything that they do, but we're getting close and we've avoided those payments of $80,000 per year.

Therefore, are you 2216 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) optimistic with regards to strengthening the existing capacity of your office in this particular area? And are you, therefore, exploring the possibility of purchasing the software for those areas where your office does not have the capacity?

I think we want to continue to fine tune and make this process of reviewing the bills as easy as possible. If it turns out that our in-house processes are as good as the software, then I think it's not worth pursuing. However, if we can find an affordable package that makes us efficient and we don't have to use as much manpower, then I think we would consider it.

Very well. Thank you very much. That concludes my questioning, Madam President.

Thank you. The Chair recognizes Councilman Nutter.

Thank you, Madam Chair. Good morning, Mr. Solicitor. A couple weeks ago, I think, in a different hearing, one of the attorneys from the Law Department came over. I 2217 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) think it was Ms. Kritz, Cheryl Kritz.

Yes.

The issue arose regarding the general topic of infrastructure improvements and specifically policy with regard to curb and sidewalk replacement or reconstruction. As I understood at the time, and as I said, this was a couple weeks ago, Ms. Kritz was going to be working on a document to either clarify or better explain the policy of the City and the ability to put capital dollars into various developments but that at the same time somehow we were not allowing those same capital dollars from the public to be utilized in general residential areas. These capital dollars in the proposed '03 Capital Budget and some previous budgets are attached to developments associated with the Federal Government program, the Hope 6 awards, and I've been trying for sometime to better understand the distinction that's being made, if not the -- I don't want to say or give the complete connotation of discrimination, but at least the difference or the difference in treatment that some Philadelphians are receiving versus others in different parts of the City based on either where 2218 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) they live or the type of neighborhood or the type of block that they live on. Can anyone give me information with regard to where that research issue is?

Good morning, Councilman Nutter. I assume that you had received a response. And I apologize if you haven't because I did sign a response to you.

I have not received it.

I apologize. It may have gone through the systems that have been established through the Finance Department and so forth.

I've heard about these systems.

And I apologize if you haven't, but I know I signed a response. And the response essentially went through the evaluations of whether or not you spend it through the Capital Budget versus the Operating Budget and the decisions made with that and why there has been determination you couldn't do it. And generally, the response was that it was a policy determination and, therefore, the powers-to-be essentially determine what policies 2219 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) would be implemented vis-a-vis the general Operating Budget and Capital Budget. I don't know if Dan Cantu, you want to add anything else to that? So that's what I understood to be the response that we forwarded to you. And I will find out why that has not reached your desk.

I appreciate that. If I can further explore that, Mr. Solicitor. So your testimony, if not, the response that I will receive shortly is that this is not a legal issue, this is a policy issue?

That's correct, Councilman.

And so that I further understand, whether it's a part of a Hope 6 application or not a part of a Hope 6 application, capital dollars can be used in a reconstruction or replacement of infrastructure generally, whether that includes curb, sidewalk, lighting, or other capital eligible items?

Well, I tend to be a little bit of an expert on the Hope 6 process. And the Hope 6 process essentially is an application in which you commit yourself on the basis of whatever 2220 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) funding you will provide for the development in conjunction with the federal dollars.

I understand that.

So that that is obviously a determination based on the applicants and the City when they promote that. Once the award is made, and there is an obligation to the federal government --

I understand that.

Not on the Hope 6 but on the the capital versus the general operating expenditure to that it would be a determination that we have concluded is based upon the policy determination.

Again, let me just make sure that I'm clear. And we don't need so much to talk about the operating side. I'm clear on what we can do and cannot do on that. The point I'm trying to get to is whether it's a Hope 6 application or not, the determination is that capital dollars can be used in this manner for infrastructure renewal or replacement curb and sidewalk anywhere in the City, and that decision on whether it's to be used as a part of a Hope 6 application or any other application or not as a part of a Hope 6 application 2221 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) or any other application is strictly a policy decision, not a legal matter?

That's what I concluded, that it was based on policy.

And just in the chain of hierarchy, is it your opinion as City Solicitor that ordinances of the Philadelphia Code, do they outrank policies?

That's correct. If you have an ordinance as long as not preempted by any other legislative activity, it is the obligation of the Administration.

Okay. The second item was, I did receive through the system a response to another issue that was raised back at the -- I believe this was in the Fiscal Stability Committee back in February. The issue arose with regard to there are some real estate tax ordinances 020031 and 020033, these bills involved a shifting in the millage for the School District rate and the City rate in order to allow for approximately $25 million in millage in the upcoming FY '03 budget to be transferred such that the School District will in essence receive an additional $25 million above what 2222 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) they would normally receive in order to be pledged then as debt service for an anticipated bond financing. A couple questions arose. You responded on February 14th to the one issue, which is that if the Solicitor does not certify to the Chief Clerk of the Council by June 28, 2002, that certain provisions or requirements that the Administration seeks to have in place with regard to, I believe, relief from the maintenance of effort component of Act 46 of the State Legislature that the rates will not change and they will remain the same. And that basically prevents the possibility of having to change the rates back to the already established City rate in the next fiscal year which would in essence be a tax hike which we know is illegal. In the Finance Department hearing on the Operating Budget, we discussed that and we cleared that issue up. The second issue arose, though, which is if you don't provide that certification and if the rates do not change, we will have already by that point -- we're required by the Charter to pass a budget May 30 -- we will have passed a budget with certain revenue estimates and expenditures in a budget in 2223 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) anticipation of the rates having changed. You've cleared up and made provisions for the rates not changing. The question is, on June 29th and June 30th going into July 1st, we will at that point have a budget that is out of balance. The question was raised at that time, what are we then left to do and what, if any, are the ramifications of that scenario? It was requested at that time that the Law Department look at that particular issue and get a response as to what happens under that particular scenario. Do you have a sense, Mr. Solicitor, of where that response might be?

That's a new question. The question that we were concerned at the time was whether or not we were going to be obligated to additional resources going forward with regard to the School District Act 46 determinations. And that was essentially the bulk of our research and response with regard to the millage question that you so articulately put forth. In regard to whether or not you have an issue on the 29th or 30th is something that we have not researched and we will be happy to research for 2224 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) you. As you know, there's an obligation, obviously, on the balanced budget issue based on our City Charter and so I really would have to determine whether or not we have based upon that conclusion that you raised give you a hypothetical response to that, because at this stage of the budget process, we have not gone that far to make a conclusion that we're out of balance.

Well, I understand that. But I would ask that the response actually not be hypothetical, but play out or layout the facts as we know them. I would like your response to deal with the very real scenario that you have a provision in the bill that says if you don't provide that certification you've received whatever the relief is that's being requested of the legislature, if you don't certify to the Chief Clerk by June 28th that such relief has been received, then the bill 20 requires that the rates stay the same. What I want to know is, we have to pass a balanced budget by May 30th. And in that balanced budget, it is assumed that the rates are the changed rates. What I want to know is, what happens and what is our recourse if by the end of business on June 28th you cannot 2225 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) provide that certification? What happens then? Is the budget then out of balance? What action will need to be taken by either the City Council or by the Administration? And lay out a course of action based on not the hypothetical, but the actual.

I will be happy to look at that since I, obviously, don't want to create any crisis. So I will look at issue particularly with regard to the certification requirement and get to you as soon as possible. Hopefully, no later than early next week.

I appreciate that. A couple last questions. I had sent a letter regarding a particular constituent issue, which we don't have to talk about the particular of that issue because that particular scenario is replicated many times a day throughout the government. It has to deal with the issue of enforcement of the various provisions of the Philadelphia Code. And at times, the conundrum, if you will, of figuring out which department or agency has the responsibility for either taking a matter to court or having final enforcement. I initially received a letter in response to this 2226 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) particular issue back on December 20th from Chief Deputy City Solicitor Ms. Gaston laying out some particulars with regard to the code and responsibilities of the Law Department and L & I. I'm sure as a legal document and if it was lawyer to lawyer -- and you know, Mr. Solicitor, that I'm not an attorney so I'm always at a disadvantage in any of my meetings or conversations with Law Department but I struggle through to try to understand. I then sent a letter back saying basically, I appreciate the education with regard to the vagaries of the code and the lesson of who does what, but it was not necessarily crystal clear. That then resulted in a legal treaties from Mr. Thompson, the Chair of the Litigation Group. I believe right after he wrote this document he probably represented someone at the United States Supreme Court and was preparing his document in such a way that he was going to get ready for that appearance. That was less clear, although great language and I know that he was on point for any discussion before a law class. Now, in all complete seriousness, it remains a mystery at times, depending on the nature of the violation as to who is responsible for what. 2227 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) Whether you're proceeding to Municipal Court on a particular item or you're proceeding to Common Pleas Court or you're going the Equity Court which I know is a part of the Common Pleas system. And I know that from the correspondence there have been training sessions between L & I and the Law Department, which I commend you for. The bottom, bottom line of all of this becomes how do you ever get anyone to either come into compliance or force them to do the thing that the code requires either that they do or that the code prevents them from doing? We've had numerous meetings around the issue of enforcement of provisos in zoning cases. We've had numerous meetings around the issue of preventing people from doing what they're already doing in zoning matters. Or when they've loss through there case and proceeded through all their various appeals, which they have a right to do, and have loss at every step including to the Pennsylvania Supreme Court or Commonwealth Court when they've denied them and the Supreme Court has decided not to hear their appeal. I mean, I think that is the end of the road. The issue is here is 2228 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) when do we make someone comply? When do they make them tear down what they have built illegally, never had the right to do, and continue to ignore us? And I think that this is a very, very serious issue. It has been for a long period of time. And as we move forward, whether under the umbrella or framework of NTI or any other construct known to mankind, enforcement, adherence to the law, some kind of civility out in our neighborhoods and true compliance and the notion that you have to be in compliance with the Philadelphia Code. It is not easier to ask forgiveness than it is to ask permission. That is the concept that I'm truly struggling with in terms of getting a resolution to many of these problem. People play the system and play the system and play the system. They know it, in many instances, better than we do. They get to keep doing what they want to do. And the people who are affected by their negative behavior never see relief.

I want to know how we're going to have a system that works, that functions, and that is easily explainable in English words or less. 25

Councilman, I agree that 2229 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) sometimes the exasperation of going through the process frustrates an entire body. I was a zoning judge and so I know essentially the code enforcement process. And to some extent there are levels in which people know how to abuse the system; you're absolutely right. And you get into hoping that someone gives you a remedy once you've won your action in court. And there are obviously jurisdictional issues, and I'll let Ms. Gaston answer in regard to the responses that she's given you. But there are obviously jurisdictional issues related to Municipal, then they go to Common Pleas and all the way up. And we should have a responsibility to make sure we, the Law Department, once we represent the City appropriately and represents an action which gives the petitioners their due credit in winning that action that there should be enforcement capacity in the part of the department of L & I. And to some extent we represent L & I, but we don't do the enforcement of each one of the divisions within the department. But Ms. Gaston can tell you about the response that she gave you and the genisis of that.

Good morning. I'm Cheryl 2230 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) Gaston. I'm the Chief Deputy of the Code Enforcement Unit. The genisis of the question was about possible enforcement against an owner of a particular property. Our enforcement actions are all referred to us by the Department of License and Inspections, and we act on their behalf to try to get enforcement. They have two systems that they use. They refer matters either to Municipal Court or to the Court of Common Pleas. The Municipal Court process is not one that the Law Department is actively engaged in. L & I has their own enforcement officers that go to Municipal Court and deal with those particular actions.

I hate to jump in at this moment, but unfortunately I have to. Why?

That is the system that has been in place and that has been --

Who made that system? I wasn't a part of that.

The Department of Licenses and Inspections made that decision.

They get to decide 2231 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) how they proceed?

Yes.

Based on what?

The Philadelphia Code which gives them the responsibility for enforcing the different City codes that are under there purview. So they get to decide --

And what is their power of enforcement? I mean, they have more power than Law Department?

Yes. The Code gives them all of the powers. They have the power to see to it that violations of the Code are corrected, that properties that are illegally --

How many Code enforcement officers does L & I have?

I don't know.

Do you have any engagement with L & I and their code enforcement officers?

We get involved in those instances where the code enforcement officer has decided that the Municipal Court process perhaps is not the best process for this particular case. 2232 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

How do they make that decision?

They make that decision sometimes based upon how many times they've been before the Municipal Court and not gotten compliance from this particular code violator. They can decide because of the complexity of the matter that they would prefer to have the matter heard in the Court of Common Pleas where you can actually ask for enforcement as opposed to the Municipal Court system which is basically a system of fines.

What's the basis upon which they make these decisions?

I can't tell why every enforcement officer makes an decision. But basically, they may be looking enforcement. They're serious kinds of violations they're not getting enforcement and what they want to is to make sure that the code violator corrects the violation as opposed to -- it may be that the person isn't coming to court. It could be that when they do come, they still have not corrected the violation.

And these decisions are solely within their discretion? 2233 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

Yes.

My question earlier was -- I'm not asking to get inside their my mind. My question was -- I mean, I have to make the assumption that if the Law Department involved in a particular matter, you have a certain set of either guidelines or standards by which you seek to make your judgments. My question was, what are the similar guidelines and standards as used by L & I to decide what their code enforcement officers do or how they make these discretionary decision?

I couldn't answer that because I don't set those for them nor do I have any role in how they decide to prosecute those particular cases.

Well, who better than the Law Department's Code Enforcement Unit to at least establish a certain level of standard about how code enforcement is going to be handled or compliance. I mean, we apparently have two different systems. We've got L & I doing whatever they want to do and however their officers decide what they do, and then the Law Department has it's own Code Enforcement Unit, which I don't know at 2234 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) what point you guys get involved, but then you have your own decision-making situations. Code enforcement is code enforcement. Violations are violations. You can only have one system and one set of standards that everyone has to adhere to.

Councilman, let me -- Bill 9 Thompson used to also head the Code Unit for Cheryl and he's the head of the litigation area. Let me see if he wants to add anything to that. But generally, I would agree with you that we as a representative body should advise and should be providing the legal advice as to the parameters with regard to the enforcement capacities and the representation. They're the client, we're the lawyers. We essentially operate in the legal realm and not necessarily in the enforcement realm, but we will enforce and will do whatever is required as it relates to our advice to those agencies and, hopefully, they don't exceed their powers and at the same time they have the capability --

I'd be thrilled if they just used the power that they have.

They have the capability of 2235 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) discretion which is given to all prosecutors and in the prosecution enforcement similarly happens that the prosecution portion of it has some discretion. But let me see if Bill wants to add anything to that.

Good morning, Councilman. I do recall both the letter and the subsequent telephone conversations that we had with respect to this issue, and I think you're right. It is an issue that we encounter many times. It occurs constantly in our practice as code enforcers. But in terms of the overview, I only wanted to say this: I don't know historically how the system evolved. I suspect it evolved as a consequence of a reflection on how much resources both the Law Department and L & I had and a determination that with low-level violations where there aren't significant life health safety issues involved and the like or where there isn't a long history of flouting the code on the part of a violator that L & I might elect in those instances to try to get enforcement through the Municipal Court mechanism. I suspect that that's the sort of thing that happened.

What's makes the 2236 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) definition of a low-level violation.

That gets to the question of who makes the ultimate determination. I think under the code it's clear that the discretion to determine code violations belongs with the chief enforcement officer under the code, and that the Commissioner of Licenses and Inspections. And that's in no small measure a reflection on the fact that L & I has the expertise in terms of engineers, building inspectors and the like, people who have the technical expertise to determine whether a violation exists. The lawyers are purely the enforcement arm of L & I. We help them in that regard. I don't think it's accurate to take away from this dual system the sense that there is no 17 communication going on constantly between the Law Department and L & I. In fact, there is constant communication, constant consultation. There are formal programs like an extensive training program that we did for L & I and its inspectors. And then there's the day-to-day conversation in which people at L & I pick up the phone and call Cheryl and her people and say, "What do you think about this? What do you think we should do? Should we proceed with 2237 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) enforcement or not?" So that avenue is always there for both L & I and Law to consult over the code and its application.

Most of the issues I've been involved in generally have been less of a technical nature. It's not about are we making a decision is this building safe or not, should this roof be done in a certain way. Although we've had a couple of those. These are usually, to put them under a phrase, they're usually quality of life issues or general code violations often having to deal with either zoning, licensing, or something like that. These are not expert decisions where someone has to have a PE after their name or 17 years of professional training to figure out what's 18 going on. The book says X. The person is doing Y. And I want to know what Z is going to do to resolve that particular problem. Whether it's a barking dog case, which in some instances the Law Department doesn't even want to pursue. Well, I want somebody to explain to the lady who can't sleep in the middle night because their neighbor can't keep track of their dog or whatever else they're doing that that's 2238 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) not an important problem to them. And let them talk to that person at 2 o'clock in the morning when they're having that kind of problem. Or let's talk about people who do go through the whole process, get their recourse from the courts. We can talk about the Tiki Hut. You want to have a Tiki Hut conversation? It's still out there. The people went to the Common Pleas Court. They won their case. The Pennsylvania Supreme Court refused to hear them. And that structure is still sitting out there. Now, I want to know what the recourse is for that person who spent their money, played by the rules, and they've gotten no recourse. Is that a discretionary decision made by L & I or by the Law Department? They lost. The structure should be removed. Or whether it's a stop-and-go somewhere that has built an facility that's illegal according code. Make them remove it. That's where you get enforcement. And tell people we don't play games. You play by the rules. You get your license. You go to zoning. You get what you get. If you lose, take it down. Which it shouldn't have been there in the first place. So I want to know when someone's going to do 2239 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) something about those issues. I'm not talking about professional discretionary issues. I'm saying the code says X. Do something. And all this conversation back and forth between L & I, at the end of the day most of it is just conversation because we're not getting results. And so people don't take the code seriously; they don't. Because they know nothing is going to happen to them. Oh, I might have to make a court appearance, I'll go, I won't go, maybe I gotta pay a fine, I still won't do what they told me to do. No one has to do anything so they don't take it seriously. And while we're having this conversation, nothing is going on. That's all I'm asking for. Enforcement. Play by the rules. If you win you get what you were supposed to get. If you lose, you don't get to keep using it and having luxury of doing it, because you know you're illegal in the first place.

Councilman, I agree with you. And I'm scheduled to try to meet with the L & I Commissioner and figure out whether or not there are cases like that in which we've already had some 2240 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) victories. We, meaning the L & I enforcement capacities, and whether it has been --

I can give you good list out of the district. You can go out that raggedy used auto dealer out on Bryn Mawr Avenue who lost their case at the Zoning Board, wormed their way back into the system illegally, lost again, appealed. We changed the law that enforcement is not stopped just because you have an appeal pending somewhere else. They still have the barbed wire up, the eight-foot high fence, the illuminated sign, and they're selling used cars, all of which are a violation of the Zoning Code. It's been going on for a year and a half. Do we have any enforcement? No. 17

I think that's a legitimate concern, Councilman. I'm unaware, but if that is occurring, obviously we need to be more responsive to your needs. I think we're falling on the case. And I think we need to --

I appreciate it, but I'm sure these things are going on all over at the City. If somebody sits over at the Zoning Board every day and listens to some of the garbage that 2241 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) goes on over there -- I'm not criticizing the Board. I'm saying that people come in with known violations. Other things come out in the course of hearing the case of other violations, and nothing happens to them. I'm not sure that L & I has a person over there to listen to this mess. And who represents the public's interest in any of these matters. The Zoning Board has representation. I've got to fight to get representation for myself. And the constituents are told, "Go hire a lawyer." Well, what's the City's position if the Zoning Board says, "You lose," and the person appeals. They have a right to appeal. What's the City's position in the matter? The Zoning Board gets represented at the next level, whether it's Common Please or Commonwealth Court. Who represents the City's interest to say "We are against this"? Who are L & I's interest or the Police Department's interest or anybody interest? The Planning Commission has a role in this. Nobody takes up their particular case in any of these matters.

In the case of the Law 2242 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) Department, the practical problem the Law Department faces is we don't have inspectors out on the street. We learn about the existence of these kinds of problems, and that is not to disparage or demean any of them. I take all of them seriously because as you suggest, they're vitally important to the individual that's involved whether they are serious in some larger sense under the code. They're serious to the person who's being affected by them. So we take every single complaint of that kind seriously. The problem is we don't know about it unless someone brings it to our attention. Ordinarily, it's L & I. But sometimes it may be a call from a Councilperson. It may be a call from a constituent. Someone from the public may call. Every call of that kind that I get or that Cheryl gets, we refer over to L & I and say, "Do me a favor. Send an inspector out there, take a look find out if there's violation." And if there is, then they'll write a violation. That violation will either come back to us or go into the system for enforcement. But that judgment needs to be made by the inspector under the code to determine if this communication from a 2243 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) citizen or a Councilperson or anyone else who's interested does in fact state a violation. Then if someone comes back and says, Yes, it's a violation, it needs to be corrected," we go into action.

All right. Then I'm going to ask you to do this. I want you to contact L & I and ask them to search their index cards or computer base, whatever it is that they use over there. I want to know how many outstanding violations exist in the L & I system today and what their status is in terms of enforcement. I want the universe of outstanding violations for every person or every business or every property that has a violation against it, and I want to where it is in the enforcement process and what either you or L & I is doing about it. If you can forward that to the Chair I would appreciate.

Well.

Thank you.

At this time the Chair recognizes Councilman Ortiz.

Thank you, Madam Chair. 2244 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) I want to congratulate you on the hiring of a new Chief Deputy of Regulatory Affairs. I think he's in the audience today, Mr. Romulo Diaz. Is he here?

Yes, he is.

He comes to us from where?

He was the Deputy Administrator for the Department of EPA, served there four years. He was second in command of EPA which is appointment by the President of the United States. And he spent years in the Department of 14 Energy, has impeccable background in public service. 15 Is, unfortunately, a Texan. He has lived in 16 Washington, D.C. his family has lived in Delaware 17 Valley in Cherry Hill area, and he is graciously 18 ceded to my pressure to serve the citizens of 19 Philadelphia at this great salary that we paid him 20 to take over the Regulatory Department that will really overlook some areas that are of high importance to us. One obviously is the fact that he has that great experience in energy will help us with the PGW issues, and the fact he has an environmental experience will help us with a bunch 2245 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) of issues that I've been working on which relate to the lead issues both in the schools and in the housing areas that I think will be a contribution to the Law Department in terms of representation of the Health Department and the other clients that we have, including the City Council of Philadelphia.

Thank you. Mr. Solicitor, you're brand-new so you're setting new policies. But how much money was paid out last year in terms of claims against the City?

We have that indemnity fund which is about $22 million, if I'm correct. I'm off by 7, $30 million.

Did we pay out $30 million last year?

Yes, we paid out 30 which essentially was a reduction of the prior history of payments. So it was at a respectable number.

Do you have a list of cases? And how many of that litigation had to do with issues coming out of the prisons, either the treatment, health services? I'd like to see a breakdown of that.

We can provide that for you. 2246 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) I think a substantial amount of the indemnity fund is as a result of payments of litigation related either to civil rights litigation, claims litigation, personal injury issues. So the bulk is in that area. We'll be happy to branch out what, if any, amount was paid as a result of any prison litigation.

Well, I'd like to see a breakdown of it all just to make a comparison as to where the cases were emanating, what were the situations. Were most of these cases taken to trial or were they settled?

Your have a combination of both.

Do you have a list of those cases that were settled vis-a-vis taken to trial?

Yes, we do.

In terms of your criteria for settling cases, what is the current criteria? Do you have a certain amount of dollars that you said maybe it's not worth, $300,000 we can pay it out, $400,000? 2247 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

We set parameters based upon -- there's a claim and a risk unit that's head by one of Joel Varillo (ph) who head our Risk Management Department and then we have a number of lawyers that get around that call themselves claims determinations. And then each one of the divisions have authority, some in the area of 30, some in the area of higher authority. And then their authority then rises to finally --

But do you have a criteria, for example, a case that's going to be $100,000 or $200,000, you would rather settle it than go to litigation or what? I'd just like to find out what's the thinking that goes into it.

Donna Mouzayck, First Deputy City Solicitor. I used to be the Chief the of the Claims Division so I'm pretty familiar with the procedures there. The value of the claim is going to change in the course of time. When something first gets filed, there's very little information that you know about that particular claim. You'll have a date, time, place and the nature of the accident and sometimes you'll have some information about the injury. More often than 2248 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) not it's generally reported like it's soft tissue or it's a fracture. It could be even less specific than that.

But as you go along you begin to get an idea.

So what we do is within the first few weeks of the case we will set a risk assessment figure based upon the information in the complaint. Thereafter, there will be an investigation and a discovery period where we both do in-house investigation along with formal discovery which would include things like the deposition, answers to interrogatories, which now provides us additional information regarding that claim. We now have records provided from the plaintiff and medical records that we would obtain in the case of personal injury, and we would use that information, now re-assess that file, and we might have to adjust the assessment on it. As the case ripens, it may go before independent sources, for instance, it may be a settlement conference and those numbers are also be examined against the claim. The final thing is on a weekly basis, there will be -- each unit has a settlement committee that 2249 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) combines the experience of all of the managers in that division so that the claim can be totally scrutinized, medical records can be reviewed, expert witness testimony can be considered whether or not it's a viable claim or not. That too could come into our evaluation. Finally, the default is considered which allow to adjust that value down.

It appears as though the rate is the lowest they've ever had with regard to any payments in terms of claims. So it will be a very, very low figure. And so you'll be very proud of the fact that we have guarded the City's money.

On of your testimony you have there, the Labor and Employment Unit, the first sentence says, "... pursues cases to curtail litigation." Most of this litigation seems to be in the area of either employment rights or civil rights. Can you explain to me the case load and the aspect that when you say you have close to 110 cases and you have improved monitoring and reporting of the origin status and cause of these cases, what does that mean?

Hello. My name Stella Tsai, 2250 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) I'm Chair of Administrative Law and I had supervised the Labor and Employment Unit so I have some understanding of what this figure means. Our prior Chief Deputy of Labor and Employment Peter Weinberg came to the unit, he came to a unit before we consolidated both the Labor and the employment cases and there was a huge case load and we had to be very resourceful with our attorneys. Over time Peter and the staff looked at the cases to determine which ones had aged for many years and that needed to be resolved and processed them and underwent extensive negotiations with the various administrative agencies to reach some settlement of some of the claims. And actually, we managed to also file certain pleadings that resulted in the dismissal of a lot of these claims. So that is what contributed to the reduction of the case load.

Could you send us an example, I mean, the process and the cases just to get an idea of what it is that took place and what these cases were all about?

Sure. I'd be glad to with our handy-dandy 4D system we will be able to do that pretty quickly. 2251 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

As you can see the management took cases that were just pending, working in the system, and Peter within his own tools of aggressively looking and disposing of as much as possible. It's unfortunate Peter is no longer with us, or Ken. He left the office, but we've -- as you know, I eliminated the Affirmative Litigation Unit and so took the Affirmative Litigation Chief and put her as the head of the Labor and Employment which will save a half million in legal expenses for the office and at the same time replaces people when vacancies occur. So I've attempted also to utilize the resources we have in the department to manage in that area. So we've taken another lawyer that was also in the affirmative litigation and placed him in the labor and employment area. And in addition to that, we intend to do a rigorous program with the federal courts. We have met with Judge Giles who is the Chief Judge of the Federal District Court of the Eastern District of Pennsylvania. And I have labored with him to try to put together a system of trying to do a major mediation arbitration program with regard to bulk of those cases. I'm also trying to work with the 2252 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) Police Department on their arbitration cases. And we still haven't hit a major agreement which we can also sort of dissect some of the cases they can handle so that we can also be alleviated in the number of cases in that area.

Thank you, Madam Chair.

The Chair recognizes Councilman Rizzo.

Thank you, Madam Chair. Good morning. Solicitor, I want to follow-up on the claim situation and maybe you can explain the relationship. I have some numbers here that are startling to me. The following is a breakdown of claim settlement for Fiscal Year 2001. Now, this is Risk Management: General Fund $6,358,721. The Aviation Fund, $470,722. The Water Fund, $809,087. That comes to a total of over 7 1/2 million dollars. Now there's asteric, this includes $4,889,037 in Osage settlements and $241,989 in relocation expenses. Before you comment on that, I would like to continue. I'd like you to tell me the 2253 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) relationship between Risk Management which is located within the Finance Department, again how risk management decides to write a check and what we're doing to prevent accidents to employees, to citizens, to visitors, that every time a Water Department construction ditch is left open and a vehicle is damaged. At one time in the City we had a safety officer. We made an effort to reduce employee accidents. We made an effort to make sure that contractors that work for the City left constructions properly lighted, properly backfilled. Well, it sounds to me that you're settling some cases. Risk Management apparently is empowered to settle others, and the numbers are skewed because of the fact that we've got $5 million in here on Osage settlement Fiscal Year 2001. I thought Osage Avenue was over a long time ago. So if you could comment what we're doing to trying to prevent employee accidents. What we're doing to try to get the operating departments like the Streets Department and the Water Department to do a better job because I drive them crazy when I drive throughout the City, being at-large. Every time I see an open ditch with the barricades up on 2254 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) the person's lawn because a bus hit it, it's a disgrace to see. And unfortunately, the law protects the average citizen to sue the City. From what I understand, if you hit a pothole, there's State law or City law limits the suit to $500. Where some poor guy's got one car or some lady and the car is terribly damaged because of the way the City of Philadelphia or a contractor working for the City of Philadelphia -- and that's another issue in itself. They know how to do business with the City. They know how to bid where the contract says that there needs to be work area protection, that there needs to be backfilling. And many of these contractors know the game, they know what they can get away with. They know they don't have to put barricades up with lights because nobody will tell them to do that. They're supposed to backfill with blacktop at the end of the day; they don't do that. They just throw dirt and rocks back in the hole. The first time it rains, you have a six-inch dip that you and you damage your wheels. It doesn't seem to me like there's very much coordination between the Law Department and Risk Management. We're spending a lot of money. 2255 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

I can speak generally as to the procedures for how claims end up in either the Risk Management Division or in the Law Department. Basically, all pre-suit matters, those where people do not have attorneys, haven't filed any litigation in any courtroom forum are going to go to the Risk Management Division. Now, on occasion in the course of their investigation and discovery of that, someone may get an attorney and the matter changes and then it will be a court matter and then it gets transferred over to the Law Department. That's for your more routine cases and the ones that I think you're referring to where there's a slip and fall on a pothole or an auto accident. On occasion, there might be something bigger. Like you mentioned earlier, Osage avenue where there needs to be a more strategic defense coordination of a number of departments. Frugally on those matters we will from the get-go get involved at the request of Risk Management and kind of handle those together. And that's what happened in Osage Avenue. And in a moment I'll turn it over to Bill Thompson who can answer for you any questions regarding Osage. 2256 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

Well, I'd like to eventually get to Osage Avenue. But I would like to understand the controls that Risk Management have. I know there was in Councilman Nutter's a Daggert Street issue, the singing homes out there. They were put up in Korman Apartments for a couple months. And that was good because those people needed a place to live. But my point is, what's the coordination on these that don't require a lawyer? Risk Management just empowered over there to have a checkbook and walk around and, "Okay 200 for you, 300 for you."

On the Dagget Street, that's actually one which, I think, did other involve other departments other than Risk Management. However, generally, on the routine cases that we mentioned like slip-and-falls, auto accidents, you know, bented rims to the tire, those matters will get referred to Risk Management and they do have their own settlement authority up to a particular level. If it reaches a very high level, then it would be referred over to the City Solicitor to get involved. I have to say that the bulk of those $6 million settlements that you're seeing 2257 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) there, if you took out those ones which we would call extraordinary, Osage Avenue, the Daggert Street, all of those would be routine claims and most of those would be below $50,000. There's just a large volume of them.

Why is Risk management in Finance? I understand that that's the pursestring. But wouldn't Risk Management be better positioned in the Law Department?

It used to be with the Law Department. And I think that I really I don't have the knowledge as to how eventually it came to be switched over to the Finance Department. I'd have to defer to someone else on that.

Well, that's fine. Do we have a City safety officer. Do we have someone that's out there trying to, like big corporations do, trying to get accident exposure down? Risk Management in the corporate world have more than just a check-writing responsibility. They also have the accident prevention part of the responsibility. And I don't see any of that. I don't see the Water Department following up with an inspector. There's a particular job I rode by each 2258 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) day I saw deteriorate more and more and hubcaps were starting to pile up by the dozens at this one particular location. And I called once, got it fix; twice, got it fixed. You think somebody would eventually say, "Why don't we do it right." There needs to be in this government someone that's responsible to contain these costs because if we're going to continue to spend millions and millions of dollars and you think that that's the way we contain costs, somebody's not paying attention to detail.

There are two things that are happening there. One of them is that there is a safety officer within the Risk Management Division. Barry Scott. I think he has some assistants as well and you could probably get more information from them. But I know that they have them because I've been involved in a number of the safety programs that they were running at the time that I was with the Claims Department. For example, we were looking at auto accidents and trying to develop ways, including education and studying the age population of the people involved in the accidents, that sort of thing to be sort of prophylactic in our approach. 2259 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) The second thing that we did was started actually on the Law Department side where we have to write up at the end of the case sort of a summary of the events and also report the amount that the case settled for or closed for in the case of a trial that we ended up paying, that gets circulated through the operating departments and the idea there is to identify the department activity that led to the cost so you would know per year how much you're spending on potholes, how much you're spending on auto accidents. And that's supposed to be a charge to the operating departments, meaning a charge figuratively. I don't mean that they get any kind of financial charge-back, but that would enable them to then assess where they could put some money. And in fact, I remember a number of years ago under the stop sign program that was being run out of the streets program, they could actually judge kind of the success of the program. You have to remember, though, that there's a two-year statute of litigation period, so one of these safety programs goes into effect, it's going to be a delay. You're not going to see it until the third year.

Well, that's good to 2260 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) hear because there's no way we can function if we don't have an effort to reduce these claims, and it's so very important we do that. Solicitor, if you could comment on -- just bring us up to speed on the almost $5 million for Osage Avenue.

Bill can talk to that. Apparently, it related to the continuation of the value of the properties out there and what they needed to do in terms closing out the old history of Osage. Bill.

Again, for the record, Bill Thompson, Chair of litigation. This was a unique situation. Risk Management certainly worked in consultation with numerous officials at L & I, the Law Department, the Administration, all in response to communications had with the Osage neighbors. At the end of the prior administration with respect to a fire that had happened there, the discovery of numerous construction defects, and demands basically from the constituents that the houses be rebuilt or renovated. Estimates were obtained with respect to the cost of that. They were exorbitant, about 2261 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) $250,000 per house or more. And I think the new administration coming in made the determination that that was just a completely ineffective use of the City's monies. Not only would it cost more per house to proceed in that fashion, but we would then open up the possibility of having further claims made for defective construction going into the future. And in an effort to settle all of those issues and any claims under the guarantee that had exited with respect to the original reconstruction, an offer was made to each of those residents to buy them out obtain title to the houses for 125,000 per house plus 25,000 relocation expenses, if necessary. About half the homeowners took that. About half did not. They have sued us in federal court. With respect to the non-settling parties, we are proceeding by eminent domain with respect to condemnation in order to package the entire area for redevelopment or for some planning purposes. The Federal Court case was dismissed on preemption grounds because of the existing condemnation approach. That case is on appeal. But all of this has been part and parcel of a much bigger strategic approach to put final end to that 2262 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) process.

I'm starting to recollect now. I just want to get clear on something. I believe the testimony was that Risk Management had a 50,000 limit?

No, I don't believe their limit.

I heard a number, and it seems as thought these settlements on Osage -- I guess my question is why was this handled by Risk Management and not the Law Department? You're talking $5 million here.

I think the reason is because they had the capabilities to go out there and do the evaluations necessary with regard to, not only the valuation issue, but the violations and then to at least attempt a culmination deal.

Maybe what we need to do here, maybe we need to have a hearing to see where Risk Management needs to be, why it's in the Finance Department, should it be in Law Department. I think it would be interesting conversation because it seems as though there's an area of possibility 2263 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) here to save significant money if this is done right and also coordinate with a very, very well done Risk Management cost reduction program to try to save money. So that's something that maybe we need to discuss.

Risk Management also does our Workers' Comp cases, so in addition to that, they also have other additional jurisdictional --

Does Risk Management also have outside law firms that work for them.

Only in the Workmen's Comp area.

I just wanted to say as a follow-up with respect to the Osage matter, the Law Department was involved in Osage, directly involved, not just in a consultation capacity.

With Risk Management.

With Risk Management, that's correct.

Thank you, Madam Chair.

You're welcome. The Chair recognizes Councilwoman Tasco. 2264 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

Thank you. Good morning. Congratulations to you. Glad to see you there. We've come a long way.

Together.

Together. I want to ask a couple questions, and I'm not going belabor the point because I think Councilman Nutter has made the issue of enforcement very clear and I just wanted to say -- and I was watching upstairs. I had a meeting, but I had it on. I had to stop my meeting so I could hear the conversation. But I wanted to come down also to say that he is not the only one who is concerned about enforcement. I think all District Councilpeople encounter this issue, and it is a serious issue for us and very frustrating. I don't think I'll ask any of the questions that he has asked. But I think that the enforcement is key because if we don't have it, nothing we do about blight is going to matter because lack of enforcement contributes to blight. One of the things that what I will just say to you because you're new in this see business here with the City is the fact that we've got a lot of contractors or homeowners or whomever who go 2265 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) before the zoning board because they refuse to get the proper permits to engage in any conversion prior to -- and then they find out they have to have a zoning permit, then they go before the Zoning Board. Something -- and it's not your job, but I want you to know that you find yourself in zoning challenging citizens who have converted properties or who have built decks or who have something without the proper permits. They have go get a variance. And as Councilman Nutter says, if the Zoning board goes against them, then they still operate. So that's problem. The other thing is what happens -- and this is what happens a lot of times. People get these contractors to do home improvements or build a deck, and then they find out that the guy didn't have the proper permits, didn't go to Zoning, didn't get the permits. And so they go before the Zoning Board. The Zoning Board is now asking, I understand, that the contractors be identified. What can be done and what are you all doing about these contractors who are doing this work without the proper license and causing these problems? 2266 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

It's an important issue because it's a consumer issue in which there should be and should have been a contractual relationship between the contractor and the homeowner. And in those contracts, traditionally there should be the requirement that all required permits would be obtained. And that requirement of obtaining the permits will be assigned to whoever is going to obtain them. And a contractor who violates that is also violating, obviously, some contractual and legal responsibilities it has to the City, and I think that that is another opportunity for us to begin looking at licenses or business licenses of these individuals who are operating without obtaining the prior permits and attempt to sanction them for their activity which is really fraudulent to some extent and also in violation of all the City codes.

Well, I want you to know that that's what happening. So whatever the process is for your office to find out when these contractors are identified that some action is taken against the contractor because they continue to do it. The poor victim has to try and figure out what 2267 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) they do about an illegal conversion, and the contractor is left to go to the next victim. So I think that the Law Department working in conjunction with the Zoning Board needs to have some process set up to further identify and go after these contractors. That is the issue I wanted to raise about the contractors.

I think your issue on the enforcement area, I think it's significant enough because I experienced it also. I think we need to figure out how we work together with the License and Inspection Commissioner and figure out whether where there is some synergy between what they're doing and how we can make them more reliable upon enforcement after they've had a victory. We always go after the inspection violation. Once the inspection violation is done, we figure it's over. I think to some extent a follow-through is what I think you and Councilman Nutter are emphasizing. I'm going to try to figure out how we can see how there can follow-up which requires a follow-up inspection and the lack of enforcement then should require us to continue to go back into court and hold those folks in contempt 2268 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) which could be very, very expense for a homeowner.

And I also suggest that in dealing with the contract issue that Zoning Board Chair or someone from the Zoning Board be a part of that so that they know that you are interested in knowing who these contractors are. L & I will know who they are, but more importantly the Law Department so we can go after them when they engage in those practices.

We have to figure out how we can put out some consumer lessons with regard to those folks who are defrauding people who essentially are trying to get reliable additions to their homes.

Thank you very much.

The Chair recognizes Councilman Nutter.

Thank you, Madam Chair. Mr. Diaz, I just have two last questions. Again, I'm sure I'm not the only person who gets these. From time to time based on applications, we get a memo from the Law Department 2269 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) regarding either an application for new liquor license or in some instances it's a transfer of a liquor license. It appears to come out of the Tax Unit, which always intrigued me as to why they would be involved in something like this. The memo usually goes to a number of governmental entities. This particular one I have is dated March 6th. It's going to Public Health, L & I, the Commerce Department, the Department of Recreation, the City Planning Commission and myself because of the transferring to location. It's in the district. The memo says, Please advise this office via written letter of any objections to this liquor license application before a certain date. Law Department will advise the Liquor Control Board as soon as possible. If you have any questions, call the particular number. I always appreciate the notice. What's the purpose of this?

I used to do that kind of work many years ago, Pennsylvania Liquor Control Board work. And usually it has to do with allowing the community to have some input if there are some violations. For example, if there was a church that 2270 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) was with 50 feet or so forth of the liquor license, whether there are any objections the community having additional liquor licenses in that community. That is m a Pennsylvania Liquor Control Board notice that's issued, and not necessarily a notice that comes from the Law Department and --

I'm sorry. This document is from the Law Department.

The notice comes to us from the Liquor Control Board.

What I'm trying to understand is once I get the notice and if I tell them that I have an objection, whatever the objection may be, to some extent that seems to be the end of it. And what I'm trying to understand is, one, why is that the end of it? Two, what other services can the Law Department provide if I have an objection -- and this is really more of a State issue because at the end of the day they only technically take testimony from people who live within 500 feet of a particular establishment. I can't live within 500 feet of a couple hundred liquor licenses in the district. So in a catch 22 kind of way, unless someone opened one down the 2271 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) street from my house, I can't object to anything. But it's nice to get the notice. What I want to know is as you follow this through the process, can the Law Department assist in filing whatever documents that need to be filed? What happens in this process is, I'll send word back we object. They'll say fine. They apparently send a notice to the PLCB. The LCB will send a notice now back to me saying, We understand you have an objection, you need to file a particular document or form, which now starts into get to a legal issue. I can't personally file that form or document and I don't know that anyone's going to assist in the filing of that particular form or document because this form comes from the Tax Unit of the Law Department. And I'm sure that person is not going to work with me. I'm not even crystal clear -- I mean, at least by this notice, this person is not a lawyer. They're from the Tax Unit they happen to be an accountant. So all I'm asking is if we can have better coordination in the representation and the concerns of Councilmembers and people in the community. If you're give us the notice for purpose of notification, I'd like it to 2272 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) be a little more than just a notice. I'd like, actually, the ability to follow up and get representation from the Law Department in these particular matters. I'll be glad to give you copy of this.

In all matters that related to the City, it's my understanding based on the Charter, we have an obligation to represent you. If there is a violation, for example, which it's an obvious violation within the representation of your district, I think we have an opportunity and obligation to help you and represent you in making sure that your objections are of record and are timely filed and are protected. And I believe if we're called upon by that, as long as I'm there, we'll make sure we give you that kind of assistance because you have a right to it. The question with regard to what we do and what happens with that obviously is a state matter and that's beyond what we can provide with regard to proceeding. I have not seen anyone request as of yet representation with regard to before the Pennsylvania Liquor Control Board on those issues, but I would be happy to do that. 2273 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

And I appreciate your earlier statement. If I could just ask you to think about it and I know you will in a broader sense. The discussion we had earlier was primarily about L & I. This is now a liquor related matter. I'm not sure what department it falls under. But there are other operating departments where, again, there are potential violations of the code where we really do need Law Department assistance and support in following up whether it's L & I, Streets, or any other department. Your assistance could be tremendously helpful.

I think the general category can be in the category of nuisances that exist within a community, which I believe if we're going to effectively work with regard to the NTI initiatives -- and that's only a personal belief, it's not a Law Department or an Administration belief, but it's my personal belief based on what's worth that if we're going to attack the issues relating to the neighborhood transformations in any way, we obviously need a strong effort with regard to the nuisance area and I think that it's my own philosophy that we should put as much of the 2274 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) resource as possible in that area. And I commit to you that I have not gotten the request in a larger number that I think mandates at this point for me to deploy people in that area. But as that demand increases, it is my intent to try to strengthen and deploy as much resource as possible to what I call the code enforcement which is the area of nuisance that you are talking about, which I think is extremely important to transforming a neighborhood.

Well, I appreciate that, and I'll use that as the bridge to my last item which is to some extent goes back to the beginning. I'm from time to time a guest which the Law Department has accommodated on a number of occasions in the past, I've been a guest and a participant at all in the CLE classes, that Continuing Legal Education classes that the Law Department sponsors for the lawyers. At one of those I think within the last couple of years there was a presenter, a Lisa Marks. She's a Housing Court prosecutor in the State Attorney's Office in Baltimore City and in the course of her presentation talked about and described a joint working relationship, not only in the office for 2275 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) conversation, but out in the street where attorneys from their office work with their code enforcement people out in communities representing the interest of constituents and community people out in neighborhoods to get to know, not only what's going on, but to then follow up and take the direct office. And I don't know how they put their entire program together. I'd be glad to give you the young lady's card. Hopefully, she's still down there and can explain what it is that they do. I only mention that because we actually brought this person here to give us information. I have no idea if we're utilizing any of the tactics or strategies that were brought forward, but someone must have thought enough of their program down thre to bring them to come in and talk to attorneys in the Law Department.

I'm having trouble remembering Lisa, but I am familiar with the program particularly in Baltimore and it's used in some other places. We've made some recommendations to the Administration. And the Administration's currently considering them. And I think we're very soon going to move forward with a program utilizing some of those kinds have ideas. One of the things 2276 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) that people do is have inspectors who are cross-trained so that if you're out there and it's a building construction site or it's tall weed or it's a health code violation, there'd be a way to help to get the help dispatched to that particular neighborhood pretty easily. And that requires more coordination, I think, among the operating departments and I see that beginning to happen. And I think very shortly you're going to see that kind of program. The second thing is dedicating some inspectors specifically for these quality of life issues. And I understand that they're currently considering that as well, looking at having some people just dedicated towards public nuisances so that they don't always get pushed down to the bottom of the pile. And it's not intentional that that happens, it's always when you have the tall weeds and some of the other kinds of issues you mentioned like barking dogs versus inspecting those properties that have falling down buildings and dangers to the public which could really take place the next day it's always going to be the buildings that control. So I think we recognize the need to coordinate efforts on the lower level cases. 2277 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) The second thing is I think that we need to kind of send a message out to the public that these aren't going to be tolerated. And part of that has been -- I know you've heard this before, but to get our own shop in order so we had our credible evidence moving forward strong so that we really had a very strong case when we appear before the court even if it is Municipal Court. I think we've done that. And I think at this juncture we're ready to tell the public that we're going to enforce everything and also to go to the courts and ask them to recognize that there's increased demand on the system going forward, but we first had to get our own shop in order.

Thank you. Thank you, Madam Chair.

Councilman. I've been willing to meet with Council folks on a regular basis if that would help to try to gather some of the areas in which there is some need to be proactive and that way that I can report to you on a regular basis. And that doesn't necessarily has to be covered by any Sunshine Law or anything. We would essentially talk about how I could help you 2278 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) within any of your areas or whether our lawyers or L & I or the zoning operations and that way I could hopefully be more responsive and responsible to you so if that works for Madam President and the rest of Council, I'll be happy to do that at your convenience.

I appreciate the offer. I'm sure many of us will recommend that to the President. And as the City Solicitor, I'm sure if you're participating in a meeting even with all of us, you can write your own opinion as to whether or not the meeting violates the Sunshine Act. I'm sure it will be followed. (Laughter.)

Thank you.

Thank you very much. The Chair recognizes Councilwoman Donna Miller.

Thank you, Madam Chair. Good morning. I just have a couple questions, but I do want to echo the concerns of my colleague around enforcement and quality of life 2279 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) issues. In reading your testimony, we noticed that on you indicated that the Law Department has prepared recommendations for local and state legislative changes to help us better respond to the needs of blight neighborhoods. I don't know whether anyone asked that question, but I certainly think that Councilpeople would be interested in getting a copy of those recommendations.

Yes, we can provide that.

You want to take a little stab quickly and send the rest?

Okay. I think the most relevant one to today's discussion would be that we asked for increased fines and penalties. Under the current code there's a limitation that the fine not exceed 300. For business such as the one that Councilman Nutter mentioned on Bryn Mawr Avenue, you know, car chop shops kind of think with barbed wire and everything, maybe $300 isn't going to do a whole lot. If we can increase that fine to 5,000, it might have more of an impact. There are a number of other legislative changes, some of them to the Philadelphia Code and 2280 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) some of that would include allowing the posting of vacant properties with a notice right there so that would be equivalent of good notice which would then allow us to proceed to court because you can't proceed to court unless you give notice. And in some of the cases it's difficult to proceed because you don't know who the appropriate property owner is because they haven't transferred that property over the years in a proper way so that it's recorded anywhere for us to find out. If there's an alternative notice procedure allowed, we'll be able to do that and be allowed to enforce on more properties. We also look to streamline the appeals processes in some cases and to write into the Code a provision that allows that to happen so that lower level things can be dealt with at lower level by a code official which, again, would mean that this would be a more efficient process. There are also a number of state legislative changes which I think that RDA probably testified to previously which basically shortens the process for transferring land which is important because then you get the land into the hands of a 2281 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) new homeowner or a business that is going to take ownership in that particular property and then the violations don't accumulate just because it's left vacant. I think that will be helpful. And I think the final recommendation that I can recall at this time is eliminating the transfer of property among property owners who are delinquent in taxes and have other kinds of code enforcement liens that they should be cured before that can happen. All of these are recommendations to the administration and eventually will come before this body to consider as to whether or not they should get passed or not.

I think that's very good. Recently in our district we ran across a problem just in terms of notice to the owner. A building that imminently dangerous. It stared to be demoed now. They had a curb side bid on Friday and the building is actually being demoed now. But it was somewhat delayed because of the notice requirement. But the other piece to this is that the property still had a mortgage on it. And I heard that L & I was sued because they demolished a 2282 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) property that had a mortgage. But we were afraid the property was going to fall. We kept going back checking on it ourselves, and the crack in the structure was just growing more and more. And so we're just kind of glad that we finally started to get it down because we saw that certainly as a public safety threat to the neighbors there on that block. So I'm really glad that you're working on these changes that will help streamline and make this process more efficient.

One of the problems when the property is now under the law we also have to have due notice to the persons who hold that mortgage. So that's kind of an extra step, but I think that we've already met with L & I as soon as that law came out to set in place procedures so that can timely happen, and I don't think that will hinder the process.

It's pretty much broad. It's notice to almost who has a real interest in it even though the court case required us to give notice to the mortgage's. We've exceeded the requirement to make sure that everybody gets noticed so we don't get another case on a notice issue. 2283 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET)

One of the things that would help my office would be that, you know, we get notices for zoning hearings and we get notices from other places, and we'd like we obtain the code enforcement case listings for Equity Court and for the code enforcement in Municipal Court, that way we can kept informed about the properties and property owners who are being prosecuted by the Law Department. And even if you send it out electronically like everyone else does, we would like to get that information on a consistent basis. We know it's much better when staff from my office and if we know a hearing is coming up, we can outreach into the neighborhood and bring residents in because they're happy when they see that the City is finally dealing with some of these public nuisance properties out in the district.

We'll talk to L & I and see if we can send you a copy of the notices they have. There are some Legal Intelligencia lists cases usually that are listed within that, but they're listed for that day before court. They're totally computerized by the court system. I'm sure we can get a copy of that and make that something we can 2284 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) send to Council. I will to try to meet with the Municipal Court judges anyway to figure out whether or not we can work on the enforcement issue generally and how we can better relate and work together. I'll bring that issue up in terms the cases that listed and how we might be able copy to provide also a copy to the Council.

Well, you know, it makes a difference when Council offices know the hearing is going on and some of the staff will show up and community people will show up. It can make a difference. And we want to be able to help make that difference and keep things moving. Also, one of my staff persons brought this to my attention. The Code Enforcement Unit did a training for L & I staff in conjunction with NTI. We saw on of your testimony, fifth paragraph. And that's the kind of training that my staff person said if he knew about it he probably would have come because it can be very, very helpful to Council staff particularly since we're going to have increased activities working with the NTI project. So we were wondering if you could do another training and make it available for Council staff 2285 3/13/02 - WHOLE- BILL 020001 ('03 BUDGET) that might want to attend.

We represent the Council. Whatever you ask for, we'd be more than happy to be of service to provide you with. That was requested by the L & I folks to do the training. Upon your request, we'd be happy to accommodate you, Councilwoman.

Thank you.