Committee Hearing, March 10, 2009

COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, March 10, 2009 1:10 p.m. - - - PRESENT: COUNCILWOMAN MARIAN B. TASCO, CHAIR COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN BILL GREEN COUNCILMAN WILLIAM GREENLEE COUNCILMAN CURTIS JONES, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN BLONDELL REYNOLDS BROWN BILL 090007 - An ordinance amending Section 15 19-203 of The Philadelphia Code, entitled "Payroll Deductions," to add the Friends of the Free Library Philadelphia to the list of designated payees... BILL 090016 - An ordinance amending Title 13 of The Philadelphia Code, entitled "Water and Sewer," by amending Section 13-101, which provides standards for the setting of water rates and charges... - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2

Good afternoon. The Committee on Finance is called to order. I would like to note that there is a quorum present in the presence of Councilman Green, Councilwoman Blackwell, Councilmen Greenlee, Kenney and DiCicco. We'll ask the Clerk to read the titles of both bills.

Bill No. 090007, amending Section 19-203 of The Philadelphia Code, entitled "Payroll Deductions," to add the Friends of the Free Library Philadelphia to the list of designated payees to whom an employee may direct payroll deductions, all under certain terms and conditions. Bill No. 090016, amending Title 13 of The Philadelphia Code, entitled "Water and Sewer," by amending Section 22 13-101, which provides standards for the setting of water rates and charges, by amending the provisions establishing special rates and charges designated as 3 3/10/09 - FINANCE - BILLS 090007 and 090016 "charity water rates and charges" and as "public housing water rates and charges," and by amending Section 13-201, which provides standards for the setting of sewer rates and charges, by amending the provisions establishing special rates and charges designated as "charity sewer rates and charges," as "public housing sewer rates and charges," and as "Federal facilities rates and charges," all under certain terms and conditions.

Thank you very much. We now call on the witnesses for Bill 090007 relative to the Friends of the Free Library. Is there anyone here from the Administration? (Witnesses approached witness table.)

Good afternoon, Chairwoman Tasco and members of the Finance Committee. My name is Cathy Paster and I'm First Deputy Director of Finance for the City of Philadelphia, and 4 3/10/09 - FINANCE - BILLS 090007 and 090016 I'm here to testify in support of Bill 3 No. 090007, which would amend Section 4 19-203 of The Philadelphia Code pertaining to payroll deductions. Section 19-203 of The Philadelphia Code, as approved by Council, authorizes the Director of Finance to deduct from salaries such sums as employees may request. The Code lists specifically those entities for which payroll deductions may be made. Bill No. 13 090007 would permit City employees to authorize payroll deductions to be paid to the Friends of the Free Library Philadelphia. Any authorization for payroll deduction is made voluntarily by the employee and may be revoked at any time. This concludes my testimony. I would be happy to answer any questions that you may have.

All right. We'll have all the testimony and then we'll open it up for questions. 5 3/10/09 - FINANCE - BILLS 090007 and 090016

My name is Amy Dougherty and I'm the Executive Director of the Friends of the Free Library, and I would like to thank Councilmembers Bill 6 Green and Frank DiCicco for introducing a bill to include Friends of the Free Library of Philadelphia, Inc. to the list of choices for payroll deductions and to also thank you, Madam Chair, for holding these hearings. The Friends of the Free Library of Philadelphia was established in 1973 as a private, non-profit, tax-exempt 501(c)(3) charitable organization under Pennsylvania's Code. Friends of the Free Library's mission is to support the Free Library of Philadelphia through affiliate volunteer neighborhood friends organizations called Friends Groups. Friends of the Free Library promotes cooperation and communication between the community and the Free Library of Philadelphia and advocates for library services and equal access to 6 3/10/09 - FINANCE - BILLS 090007 and 090016 information in all formats for every child and adult in Philadelphia regardless of race, creed or income. In broader terms, as outlined in the organization's 2005-2010 Strategic Plan, Friends of the Free Library's goal is to build the number, capacity and sustainability of our Friends Groups. The Friends of the Free Library Board has been committed to the successful achievement of the Plan's main objectives, which are a Friends Group at every one of the 54 libraries, adequate funding for six full-day library service in all communities, the library as a stabilizing force in building the community together so as to help all citizens achieve their full potential, and the library as a safe place for children. The Friends of the Free Library has two main programs: Community Outreach, in which we strengthen promote, support and form library Friends Groups. 7 3/10/09 - FINANCE - BILLS 090007 and 090016 In 2001, we had 21 library Friends Groups and today we have 50. So that's one of our major accomplishments. And I would also like to thank City Council members who have helped us reach out to the community and help get them engaged in library services. Our second major program is Book Corner, which is a used bookstore located right behind Central Library where books donated by the public are resold at modest prices. Part of that program is, we have another project called Books for Friends, in which we offer free books to area organizations for their client needs or for resale. Every year the Friends of the Free Library of Philadelphia receives an independent audit, which is a thorough review of the agency's financial statements and fiscal practices. Friends of the Free Library has always received a clean audit, and copies of our annual audit are available by law -- actually, 8 3/10/09 - FINANCE - BILLS 090007 and 090016 by law are part of the public record and available upon request or at Guide Star. That ends my testimony.

Thank you very much for your testimony. Is there anyone else here to testify on this bill? (No response.)

What we're going to do right now, because the next bill will require a lengthy discussion, we're going to adjourn the hearing and go into a -- suspend the public hearing, go into a public meeting so we can move this bill out of Committee, and then we'll go back into the public hearing for the next bill. We will adjourn -- we'll do what I just said. Could I get a motion on Bill 22 090007. The Chair recognizes Councilman Green.

I make a motion that the bill number that you just 9 3/10/09 - FINANCE - BILLS 090007 and 090016 mentioned be reported out of this committee with a favorable recommendation and a suspension of the rules so that it can be heard at the next meeting of Council. (Duly seconded.)

It has been moved and seconded that Bill 090007 be reported out of Committee with a favorable recommendation and that the rules of Council be suspended so this bill can be heard at Council's next session. All in favor will say aye. (Aye.)

Is there any opposition? (No response.)

There being none, the motion is carried. Thank you very much.

Thank you.

All right. We're back into the public hearing. 10 3/10/09 - FINANCE - BILLS 090007 and 090016 We'll adjourn the public meeting and we're back in the public hearing. We will now hear Bill 090016, and we have the Administration to testify. COUNCILMAN DiCICCO: Madam Chair?

Yes. Oh, I'm sorry. He can come up, but we do have -- Councilman DiCicco is the sponsor of the bill. He wants to make remarks. Councilwoman Jannie Blackwell would like to make remarks before we begin. The title was read at the beginning of the session. COUNCILMAN DiCICCO: Thank you. Thank you, Madam Chair, and good afternoon, everyone. Before I begin, I just wanted to quickly explain the reason behind my introducing this legislation. Currently, the Code allows the Philadelphia Water Department to provide special water and sewer rates to registered charities. The special rates 11 3/10/09 - FINANCE - BILLS 090007 and 090016 are currently set at 75 percent of general service rates, representing a 4 percent discount. 5 million annually. Likewise, PHA, 8 Philadelphia Housing Authority, also 9 receives a discount of five percent, 10 amounting to just over $500,000 annually. 11 These discounts do not impact 12 the General Fund, but require 13 non-discounted Philadelphia Water 14 Department customers to basically 15 subsidize the charitable accounts. In my 16 opinion, this policy mandates that every 17 Philadelphia business and household 18 contribute to these 3,200 organizations. 19 I don't think that's right. 20 Considering many of our 21 residents' current financial situation, I 22 find it difficult to ask our constituents 23 to continue subsidizing these charities 24 and PHA. If the City feels that a 25 discount is appropriate, I believe that 12 3/10/09 - FINANCE - BILLS 090007 and 090016 that discount should derive from our General Fund rather than off the backs of the average citizen in Philadelphia. Having said that, I also understand that many of these institutions also face difficult economic times and some have undergone financial planning for the next fiscal year. As such, I will offer an amendment. This amendment will postpone any increase in water and sewer rates until July 1, 2010. For the following four years, the discount will be phased out so that on July 1, 2013, every Philadelphia Water Department customer will be paying the same rate. In closing, I want to make one more important point. Water is a product just like bread or eggs or milk are products. Everyone pays the same amount for a loaf of bread. Why shouldn't everyone pay the same amount for the water they use? I understand that water and 13 3/10/09 - FINANCE - BILLS 090007 and 090016 sewer service is provided by the City and I understand that there's lots of people who feel that they're entitled to special privileges in the form of discounts. Unfortunately, no matter how well intentioned, these discounts are paid by other ratepayers. And it is not a little discount. It adds up to over $9 million annually. That's millions of dollars that can be used for infrastructure improvements, that can be used to create jobs or that could even be diverted back to other Philadelphia Water Department customers. I respect every organization in this room today and those organizations who were not able to attend, and I respect the work and dedication that each of the charities and non-profit institutions provide for the citizens of this city, but I also respect the average resident of Philadelphia, and I don't think that this policy is right and I don't think it's fair. Maybe the City 14 3/10/09 - FINANCE - BILLS 090007 and 090016 and the taxpayers should be providing additional support to all, but it shouldn't be like this, not through a little known program, not through our water bill, where we don't see it and we don't know where it goes. That's why I introduced this legislation. That's why we're here today, and that's -- I wanted everyone to understand that after all is said and done, this is not meant to be any penalization or a lack of support or a lack of appreciation on behalf of myself or the members of this body or the Administration for all the charities -- all the good work that charities have done.

I hope this clears things up, Madam Chair, and I thank you for the opportunity to have some opening remarks.

Thank you very much. The Chair recognizes Councilwoman Jannie Blackwell. 15 3/10/09 - FINANCE - BILLS 090007 and 090016

Thank you, Madam Chairman. Good afternoon. Thank you to the Committee and all those who are here today as we consider Bill No. 090016, eliminating the percent discount on 8 City water and sewer rates paid by 9 non-profit organizations, hospitals, 10 religious and educational institutions. 11 While I recognize that the City and 12 region are experiencing an unprecedented 13 fiscal crisis, I do not support efforts 14 to increase water and sewer rates on the 15 City's charitable institutions. As such, 16 I oppose Bill No. 090016 and would ask 17 that it be held in Committee at the 18 conclusion of today's hearing. 19 The City's non-profit and 20 tax-exempt organizations, including the 21 Philadelphia Housing Authority, 22 healthcare, religious and educational 23 institutions, contribute significantly to 24 the health, welfare and quality of life 25 of the City and its citizens. 16 3/10/09 - FINANCE - BILLS 090007 and 090016 Non-profits bring an energy, a vitality and a wealth of talent to every neighborhood in our city. These agencies and institutions provide services that define the life of our city, services such as shelters for the poor and homeless, shelters for battered women. Religious institutions like churches, synagogues, mosques and temples fulfill the spiritual needs of our citizens and also provide so many needed social services. Our arts and cultural institutions are also increasingly important economic drivers for our city's tourist industry and for our city's economy overall. And our educational institutions, which include an outstanding private and parochial elementary school system, secondary schools and our great universities and colleges, provide many valuable service to our citizens by the activities they support every day in our city. 17 3/10/09 - FINANCE - BILLS 090007 and 090016 These non-profit charitable organizations provide thousands of jobs to thousands of residents of the City of Philadelphia. A large portion of those employed in the City's non-profit community live, shop and play in our city, spending significant dollars helping to grow our economy and paying into the revenue stream of sales, wage, real estate and business taxes. This revenue and spending by employees of non-profits help the City provide the essential services that benefit all City citizens. Taking away the water revenue discount from charities poses extraordinary hardships on them, since every dollar paid out must be either cut from current programs or raised from a public that is hard-pressed in these times to increase in charitable giving. Area non-profits are collaborating with local communities on many bold initiatives to improve public 18 3/10/09 - FINANCE - BILLS 090007 and 090016 education, public health, economic development, employment opportunities, the quality of life and physical landscape of Philadelphia. They also work to promote sustainable and equitable economic growth throughout the region. In West Philadelphia alone, Drexel University and USP, the University of the Sciences of Philadelphia, have been consistent supporters of community-based organizations and activities. USP allows community organizations to use its facilities for meetings and other events at a cost of $25,000 per year, for which it is not compensated. Drexel University provides more than $10 million annually in uncompensated medical care and has been a prime supporter of the Mantua Community Improvement Committee, or MCIC, a community-based organization which helps to keep the Mantua community, a long underserved section of the City, clean and safe. Drexel provides $50,000 to the 19 3/10/09 - FINANCE - BILLS 090007 and 090016 University City District and more than $6 million per year on public safety, alleviating some of the City's financial burden for providing public safety. Last year alone, Drexel provided $12 million in scholarships to Philadelphia public school students citywide.

The University of Pennsylvania has initiated a series of programs where Penn has taken an active role in its home neighborhood. The University has instituted programs for the purchase of goods and services from local businesses, hiring local residents and encouraging existing staff to relocate in the University City area. These initiatives have encouraged retail and residential development and have improved safety and security in the University City area. In fact, the Penn Police Force is the fourth largest in the Commonwealth, patrolling the University City area and relieving the burden of that task from the Philadelphia Police Department. 20 3/10/09 - FINANCE - BILLS 090007 and 090016 Penn's students and faculty, through university-sponsored services and partnerships, engage and benefit residents of low-income communities both in our own neighborhoods and throughout Philadelphia. Free clinics run by the schools of dental medicine, law, medicine and nursing, as well as the Wharton School, offer advice, treatment and service to residents of West and Southwest Philadelphia. Penn institutes and the university-wide Netter Center for Community Partnerships engage faculty and staff with local youth and Penn students to work in partnership with neighborhood residents to develop solutions for neighborhood problems. The University of Pennsylvania Health System accepts patients in serious need of medical care regardless of their financial status. During the year ending June 6, 2006, the Health System provided approximately $172 million in uncompensated care. It provided services 21 3/10/09 - FINANCE - BILLS 090007 and 090016 to welfare recipients who participate in Pennsylvania medical assistance and local managed Medicaid programs. The cost of those services exceeded reimbursements by $52 million in 2005 and $61 million in 2006. The University Health System provides various community services such as screenings for the detection of breast, colorectal and skin cancer, cancer support groups, a toll-free number for cancer information, free immunization shots, training programs for the City Fire and Police Departments and health education classes. The School of Nursing's LIFE program enables more than 350 local seniors to live independently. Penn's partnerships with the School District of Philadelphia include the Penn Alexander School, several university-assisted community schools and the Sayre Health Center, the Agatston Urban Nutrition Initiative, the West Philadelphia Tutoring Project and Young 22 3/10/09 - FINANCE - BILLS 090007 and 090016 Scholars program. I am particularly proud of the University's support of the Lucien E. Blackwell Apprenticeship Program that provides training in the building trades in cooperation with the Philadelphia Building and Construction Trades Council. I've only mentioned a few. I have not talked about the role that Children's Hospital of Philadelphia and all the other institutions play and so many churches and small non-profits play to improve the quality of life for everyone in our city. I realize these are harsh economic times for our city and our nation. Therefore, I appeal to this committee to provide the opportunity for these organizations to work with the City so that all interests may be served in a mutually agreed-upon manner. I feel that we, as elected officials representing non-profit organizations, schools, churches, hospitals, colleges and 23 3/10/09 - FINANCE - BILLS 090007 and 090016 universities, the Philadelphia Housing Authority, can request no less. Again, I respectfully ask that this bill be held today and that an opportunity be afforded for compromise. Thank you for your consideration. )

Thank you very much, Councilwoman. Are there any comments from any other members of the Committee before we begin the testimony? (No response.)

Thank you, Mr. Richardson. COMMISSIONER RICHARDSON: Good afternoon, Councilwoman Tasco and members of the Finance Committee. My name is Keith J. Richardson. I'm the Revenue Commissioner. I am here today to testify on Bill No. 090016, which was introduced by Councilman DiCicco. This bill amends the provisions of The Philadelphia Code 24 3/10/09 - FINANCE - BILLS 090007 and 090016 pertaining to discounts for water, sewer and storm water bills for charitable institutions and the Philadelphia Housing Authority. The bill also eliminates a provision pertaining to special federal facility rates and charges for sewer rates. These provisions, generally referred to as "charity water and sewer rates," have a history dating back to the early 1900s. Known as "6 cent" charities - schools, places of worship, college, hospitals, universities and other institutions of purely public charity -- were billed 6 cents for each 1,000 cubic feet of water usage and a similar amount for the wastewater service. This rate represented a very small portion, less than two percent, of the actual cost of water and sewer services rendered to these customers, thus requiring a significant subsidy from all other non-discount customers. In the 1970s and '80s, as a 25 3/10/09 - FINANCE - BILLS 090007 and 090016 condition of federal regulations governing the receipt of millions of dollars in capital grants associated with rebuilding the City's three wastewater plants, the Water Department was required to collect from each class of customer at least the operations and maintenance costs of wastewater services. As a result, the Water Department increased the "charity rates" in three steps as follows: On July 1 of 1981, water and sewer charges to charities were increased to 25 percent of general service rates. On July 1 of 1982, charity rates were increased by 50 percent to general services, and on July 1 of 1983, charity rates were increased to 75 percent of general services, thus ending with the 25 percent discount. This 25 percent level of charity discount has remained in place since 1983. And in 1998, by Council ordinance, a five percent discount was established for PHA. 3/10/09 - FINANCE - BILLS 090007 and 090016 The Administration welcomes this long overdue opportunity presented by this bill to reevaluate these charity water and sewer discounts. On behalf of the Administration, I'd like to thank Councilman DiCicco for introducing this bill. The City must regularly examine the impacts of the subsidy programs and the time has come to reassess the water and sewer discount for charitable organizations. 5 million. In addition, there were 6,160 PHA accounts with a discount, totally slightly more than a half a million. As you know, the Water Department is not a profit-making entity. Water rates are set at a level sufficient to cover all the operating expenses and debt service, thus the cost of these discounts to charities and PHA require additional 27 3/10/09 - FINANCE - BILLS 090007 and 090016 revenues from other residential and commercial customers to cover the revenue lost. As Philadelphia's families and businesses, large and small, confront unprecedented dire financial struggles in the face of a worldwide recession, we need to reconsider whether they should consider to bear the cost of this subsidy. In addition, the Water Revenue Fund has incurred many additional unprojected obligations as a result of the worldwide financial crisis. These expenses include additional interest on short-term debt, increased liquidity in pension costs, and soaring costs for treatment chemicals. Bill No. 090016 would improve the nearly $9 million burden that commercial and residential water and sewer customers would otherwise bear and would provide relief to the Water Fund to offset the increased costs.

I think it's important to state that Philadelphia's charities, hospitals 28 3/10/09 - FINANCE - BILLS 090007 and 090016 and universities contribute tremendously to the City, adding not only to the economy but to the culture and social well-being of the community. Their work educates, houses, entertains and heals us. However, the special value they add is supported financially by the City through exemption from certain taxes and opportunities for grants and subsidies, in addition to the discounts for water and sewer services. It is my understanding that the sponsor is proposing an amendment to this bill that would provide for a phaseout of the charity and PHA discount over several years. Such a phaseout would allow these customers to better plan and budget for this cost and mirrors the approach that was taken back in the 1970s and '80s. A phaseout is a very reasonable approach and would be supported by the Administration. As the Administration seeks ideas across City government to maintain 29 3/10/09 - FINANCE - BILLS 090007 and 090016 any services without overburdening our already financially constrained citizens and businesses, the Administration is pleased to support Bill No. 090016 in its current form or with a phaseout over several years. Thank you for allowing me this time to share my views on this important matter and the City and water customers of Philadelphia. I would be happy to answer any questions that you may have.

Thank you very much. Of the stimulus dollars that are coming into the City, have you identified any of those dollars that would go to the Water Department? COMMISSIONER RICHARDSON: The Department has applied for $231 million in stimulus money, but they don't have any word yet on the decision of the application.

How much? COMMISSIONER RICHARDSON: 231 30 3/10/09 - FINANCE - BILLS 090007 and 090016 million.

And what would that be for? Is the Water Department here? (Witness approached witness table.) DEPUTY COMMISSIONER CLARE: Hi. I'm Joe Clare. I'm Deputy Commissioner of the Water Department. Those $231 million worth of projects were made in six applications. One was for sewer pipes in the street, one was for water pipes, one was for wastewater plants, one was for water plants, one was for green projects and the other -- did I get them all? They're primarily shovel-ready projects, as we call them. They're basically infrastructure projects that are ready to go and we're waiting word from the State agency as to how much funding we will receive.

And so if the City were successful in getting the 31 3/10/09 - FINANCE - BILLS 090007 and 090016 $231 million, it would go to the Water Department for water and sewer purposes, right? DEPUTY COMMISSIONER CLARE: That's correct, Madam Chair. It's our understanding that a total of 212 million was awarded statewide, so we certainly don't expect to get 231 million. We're unsure at this point whether or not we'll get any funding.

If you had the $9 million that Councilman DiCicco talked about in your budget, how would you spend it? DEPUTY COMMISSIONER CLARE: Well, this year alone we have about $10 million in additional debt service expense, primarily related to our short-term bonds, and that would go a long way towards paying those extra debt service costs.

How would you pay otherwise if you didn't have the 9 million? 32 3/10/09 - FINANCE - BILLS 090007 and 090016 DEPUTY COMMISSIONER CLARE: We would basically slash our operating costs, find whatever additional money we could and draw the balance from our Rate Stabilization Fund.

Are you bound to hold a certain amount of dollars for your debt service each year? DEPUTY COMMISSIONER CLARE: We're required by ordinance to meet all our debt obligations and cover them by 1.2 times.

So you would basically use the $9 million to help you pay debt service? DEPUTY COMMISSIONER CLARE: Correct.

But you are meeting the debt service now? DEPUTY COMMISSIONER CLARE: We are obligated for the debt service right now, that's correct. Although the rates that were set provided for some $174 million worth of debt service this year, 33 3/10/09 - FINANCE - BILLS 090007 and 090016 so obviously we're predicting about $184 million in debt, so the rates are not adequate to cover the existing debt service.

Any other questions? Councilman DiCicco -- Councilwoman Blackwell.

Thank you. Money saved by eliminating this discount can't be used to keep libraries, swimming pools and rec centers open or fill other gaps in the General Fund budget; is that correct? COMMISSIONER RICHARDSON: That is correct. This is not General Fund money. This is Water Fund.

Didn't the Water Department recently raise tax rates for all customers to the tune of $317 million for the next three years? COMMISSIONER RICHARDSON: It was about 260 million that passed for the 34 3/10/09 - FINANCE - BILLS 090007 and 090016 rates that were increased, not 317.

Thank you. You continue to make my point.

Could I follow up on that for a minute?

Yes.

If they raised the rates to $260 million, was that amount required to cover debt service? DEPUTY COMMISSIONER CLARE: That amount was required to cover debt service at the time the rate study was completed in summer of 2007. Since then, short-term interest rates have gone from approximately 1.5 percent up to about 7.5 percent.

So you need additional dollars to pay for the debt service. DEPUTY COMMISSIONER CLARE: Correct.

Go ahead. Thank you. 35 3/10/09 - FINANCE - BILLS 090007 and 090016

In your testimony, you state that non-profits are supported financially by the City through exemption from certain taxes and eligibility for grants and subsidies, in addition to the discount for water. However, isn't the Administration planning to reduce that support with new business privilege taxes, regulations, payments in lieu of taxes, or PILOTs, and reduction of and elimination of some grants and subsidies? COMMISSIONER RICHARDSON: Currently, the Department of Revenue is looking at the non-profit regulations. We haven't made a determination or not yet, but non-profits will be paying business privilege tax. Again, currently, non-profits are not paying any real estate or business privilege tax to the City of Philadelphia. We're getting the funds from wage tax dollars for the citizens that work for the various organizations. 36 3/10/09 - FINANCE - BILLS 090007 and 090016

I happen to know that the Administration, in addition to doubling taxes, has met with private non-profit or has met with major non-profit institutions about this whole issue and they have been told they're paying more in business privilege taxes. COMMISSIONER RICHARDSON: That is incorrect, Councilwoman Blackwell. We met with them on February 13th and we held a hearing at the MSB building. We haven't made a determination on that yet. We will be meeting with a consortium of individuals in April to continue dialogue in regard to the non-profit regulation. So it has not been determined yet.

Thank you. I hope you will consider our deliberations today. We know that 11/1/08 the increase was -- when we talk about rates, the increase was 7.8 percent; 7/1/09, 6.9 percent; 7/1/10, 6.6 percent; and 7/1/11, 37 3/10/09 - FINANCE - BILLS 090007 and 090016 6.5 percent. That's where the $317 million comes from when the water -- which is the figure we mentioned in terms of the Water Department raising these -- eliminating this discount when it can't even go for City services that we need so desperately. My final question, and then I'll defer to my colleagues. With the recent increases, isn't the Department able to meet its obligations under the Charter and by governance to have a balanced budget even without eliminating this discount for non-profit organizations? DEPUTY COMMISSIONER CLARE: Yes, that's correct. We can meet our obligations.

Thank you. I thought so. Thank you very much.

Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam Chair. 38 3/10/09 - FINANCE - BILLS 090007 and 090016 I think Councilwoman Blackwell raised an interesting point, which I was going to talk about, that many of these institutions receive the benefit -- are the beneficiaries of not having to pay real estate taxes and other taxes that private businesses and/or ratepayers are paying throughout the City. And, again, I will make this perfectly clear. I certainly appreciate, as I know all members of Council, the good work that these institutions provide, all the great things that CHOP and the University of Pennsylvania and Temple and Jefferson provide to this city. We've been supportive of many programs that have come across our desk in City Council over the years to support them. But we're faced with some difficult decisions, not only as a city but as a country. But speaking for Philadelphia, we're going to be presented with a budget next week. I don't know the details of the budget. I don't know if anyone does besides the 39 3/10/09 - FINANCE - BILLS 090007 and 090016 Administration, and I think that they're not probably certain as to what the final budget will be. It is my guess -- and it may be supported by other members of Council -- that we're going to see some increases, either additional increases in fees and/or increases in real estate taxes. So the ratepayer that we're trying to give some relief to by asking those who are receiving water and using water to pay their fair share are faced with the possibility of additional real estate taxes, at the same time these great institutions have had the luxury, for a lack of a better word, of not having to pay for real estate taxes for many years. It just falls back on the ratepayer again. And I thought that the bill and the amendment was a compromise to get us over the next year and phase in the elimination of the percent over a 24 four-year period, from 2011 through 2013, 25 not unlike what was done in the early 40 3/10/09 - FINANCE - BILLS 090007 and 090016 '80s. I don't know if it was the Goode Administration, who I think was in at the time. The same thing occurred then. We just can't have it both ways. And, yes, it would be nice if we can take this money, throw it into the General Fund and save libraries and pools, but that's not the case here. But it would give some relief, I think, in terms of your capital program, which you've done a great job in freeing up some additional resources, and I don't know if the 9 million, if this bill were to pass and you got the 9 million, would that be used to float another bond that would increase your capital program or accelerate the capital program? I mean, these are the kinds of things that I'm thinking of, because we've all been subject to a lot of criticism over the last few years about storm water runoff and flooding of basements, and it's all because our system is antiquated. And despite the Water Department's best 41 3/10/09 - FINANCE - BILLS 090007 and 090016 efforts -- and they do a great job -- we're still behind the eight ball. We're still many years behind. So what little this may be when you spread it out over 3,200 charities -- I was thinking -- and I'm a contributor of WHYY. WHYY, correct me if I'm wrong, as a non-profit doesn't pay a water bill, but they have the ability to put on a program and reach out to the people in the region to raise money. Joe the Plumber can't do that. He has to come home from work, has a budget and needs to pay his bill or her bills based on what their income is. So we're asking that everybody -- and I think the President has asked for this. We all have to start thinking a little bit differently about how we do business, and we all have to change our ways and everybody has to pony up a little bit more, although we don't like that. And I guess the question would be -- would have been for 42 3/10/09 - FINANCE - BILLS 090007 and 090016 Richardson, or both of you can answer this.

When it comes to PHA, who pays the bill? Does the resident pay the bill or does the Authority pay the bill? COMMISSIONER RICHARDSON: We bill the Authority. COUNCILMAN DiCICCO: Do they bill the resident? COMMISSIONER RICHARDSON: I don't know if they bill the resident or not. I can't answer that. COUNCILMAN DiCICCO: Is there anyone from PHA here? If you are, I'd like to have the answer to that question. My understanding --

They're up next, Councilman. COUNCILMAN DiCICCO: Okay. You can answer that question when you get up. It's also my understanding that PHA is a million dollars in arrears on its water bill payments. COMMISSIONER RICHARDSON: That is correct. They're $1.1 million behind 43 3/10/09 - FINANCE - BILLS 090007 and 090016 right now. COUNCILMAN DiCICCO: And how does that impact the residents of PHA? Will they be charged for -- again, I have to wait for the PHA folks to come up, so I'll hold that question. Is PHA a good customer? I guess when you're 1.1 million in arrears, it's hard to say yes, right? I'm not here to pick on PHA, but, again, I have to keep qualifying -- keep letting everyone understand, I'm just trying to make a point that this agency, which receives federal subsidies -- and many of the institutions that Councilwoman Blackwell spoke about and I think she said in her remarks receive federal, state and city funding or grants -- these are institutions that are not private businesses that have to figure out on productivity if they sell enough merchandise, they can survive. They're taxpayers. Ratepayers are already funding these organizations, and 44 3/10/09 - FINANCE - BILLS 090007 and 090016 they've been asked over the years to continue to subsidize their water, their water usage, and because of these hard economic times, I felt it was something we needed to have a discussion about and see if we can't phase in the discount or eliminating the discount over a period of time. So if you take in this year and the four years, we're talking five years, five years from today when the discount will no longer be available at the 13 percent. 14 COMMISSIONER RICHARDSON: Just 15 to -- 16 COUNCILMAN DiCICCO: If 17 somebody has a better compromise, I'm 18 willing to listen. 19 COMMISSIONER RICHARDSON: Just 20 to give you some numbers of what revenue 21 could be generated with your amendment to 22 the bill. For FY 2010, 3,200 accounts 23 that we have in charities and 24 organizations will be paying about $1.9 25 million additional revenue. At the same 45 3/10/09 - FINANCE - BILLS 090007 and 090016 time, PHA will be paying $149,250 additional revenue. In 2011, it goes up to 3.9. PHA is 298,000. By 2012, 6.7, and PHA's side would be 447,000. And by the end of 2013, it would be $9.8 million because it would be no discount anymore and PHA would be at $597,000 additional revenue. COUNCILMAN DiCICCO: Thank you. COMMISSIONER RICHARDSON: And to piggyback that, with regards to the accounts with PHA, if this bill is approved, in Fiscal Year 2010, the monthly bill will be an increase of 66 cents, which over an annual period will be $7.92. Going to 2013, the monthly bill increase is $2.64, at an annual bill 19 of $31.68. COUNCILMAN DiCICCO: Thank you. Thank you. Thank you, Madam Chair.

Madam Chairman, PHA will come and they will speak for themselves, but I wanted to ask 46 3/10/09 - FINANCE - BILLS 090007 and 090016 my colleagues if they've considered how many small organizations rent and own property, how many small churches there are that represent people that provide hope to people who live in our communities, how many small groups that we hurt by this kind of a bill and that we don't raise a lot of money from. Their properties aren't large enough and don't provide enough. What this really does -- you know what? President Obama won because he sold hope. He let people know that he cared about them and that in spite of these times where Arlen Specter today said had the Senate not passed that bill, we would be in a depression, our President sold hope. We can do no more in the City of Philadelphia where not only major institutions but small organizations, small organizations who own, who rent buildings, small non-profits that serve, that volunteer their time, small churches, small 47 3/10/09 - FINANCE - BILLS 090007 and 090016 storefront churches and regular churches that exist just to try to sell hope, that try to let people know in the faith of their choice, but that they're here to serve. These are people that the City affects and where you're not going to get any real money, because their buildings don't generate that kind of money. But water is a denominator. If you don't have water, you can't be open. And so we certainly hope that this Committee will consider that. Large and small non-profit organizations are affected by this bill. Thank you, Madam Chair.

Thank you. The Chair recognizes Councilman Goode.

Thank you, Madam Chair. Good afternoon, Commissioner. COMMISSIONER RICHARDSON: Good afternoon.

48 3/10/09 - FINANCE - BILLS 090007 and 090016 Commissioner, you mention in your testimony and it's been mentioned by other members of the Committee that there are 3,200 charity accounts. What qualifies someone for a charity account? What qualifies an institution for a charity account? COMMISSIONER RICHARDSON: A charity account could be a university, School District of Philadelphia, the Archdiocese, a church, a non-profit organization.

But how does someone get a charity account versus a normal account? COMMISSIONER RICHARDSON: They would have to apply with the Water Department for application to receive the charity.

So what qualifies an institution as a charity? COMMISSIONER RICHARDSON: I'll defer. I don't know. DEPUTY COMMISSIONER CLARE: 49 3/10/09 - FINANCE - BILLS 090007 and 090016 They would generally have to have an IRS certification as a purely public charity.

So is it based by IRS certification? DEPUTY COMMISSIONER CLARE: That's certainly one of the criteria that we look at when approving charities.

Are there different classifications of charity accounts? DEPUTY COMMISSIONER CLARE: Yes, there are. There are educational institutions, there are charitable institutions and there are -- the PHA has its own class right now.

So can you create different classifications of charity accounts and take away the discount for certain classifications and not for others? DEPUTY COMMISSIONER CLARE: Well, that's really a legal question, but certainly my opinion would be, yes, you could do that. 50 3/10/09 - FINANCE - BILLS 090007 and 090016

And of the 3,200 charity accounts you have, is there a small minority of those accounts that actually account for the eight and a half million dollars? In other words, are there perhaps five or ten large non-profit institutions that account for the bulk of that money? COMMISSIONER RICHARDSON: The top organizations account for 66 12 percent of the discount. That's 5.6 13 million. The other 2.9 million is about 14 1,700 organizations. 15

Could you 16 submit that information to the Chair, 17 that list you have? 18 COMMISSIONER RICHARDSON: Sure. 19 I can give you the top 25. I don't have 20 it broken out to the other 1,700, but 21 just the top 25. 22

Break 23 it down. 24

So 25 essentially the top 25 accounts generate 51 3/10/09 - FINANCE - BILLS 090007 and 090016 about $5.6 million in terms of discounts? COMMISSIONER RICHARDSON: Yes.

Okay. Thank you. Thank you, Madam Chair.

The Chair recognizes Councilwoman Brown.

Good afternoon. Follow-up to Councilman Goode's questions. Of those 3,200, I hear that they're broken down by type, educational, charitable, et cetera; is that correct? COMMISSIONER RICHARDSON: Yes.

Is there any breakdown by budget, following up on Councilwoman Jannie Blackwell's concerns regarding your small churches and small -- COMMISSIONER RICHARDSON: When you're saying their budgets --

The budget of a University of Pennsylvania compared to the budget of a small church in West 52 3/10/09 - FINANCE - BILLS 090007 and 090016 Philadelphia. DEPUTY COMMISSIONER CLARE: We don't even have that information on file.

And so when they send in their documentation that qualifies them for charitable institution, what is the defining document that says they are that? DEPUTY COMMISSIONER CLARE: Well, it's basically the use of the facility. For instance, the University of Penn, who is an educational institution, generally qualifies for an educational discount, but such discount is not granted on its dormitories, because they're used for residential purposes. So a church, for instance, would get a percent discount on the 20 church, but not on the rectory or the 21 convent. 22

I see. So 23 as you prepare the documentation for the 24 Chair, if you would also add a column or 25 a grid that breaks down those 53 3/10/09 - FINANCE - BILLS 090007 and 090016 organizations by budget. COMMISSIONER RICHARDSON: When you're saying "budget," their budget?

Water usage by budget, water usage amount. The bottom line for Philadelphia University would be very different from a White Rock Baptist Church. The water usage amount would be very different because of the scale of the -- so if you would add that factor in the breakdown that you're presenting to the Chair. COMMISSIONER RICHARDSON: For clarification, you want their water usage? Because when you're saying their budget, we have to go to the organization for their budgets. We don't know their budget numbers.

Usage, water usage.

Quick follow-up. Are we giving out any million-dollar discounts? 54 3/10/09 - FINANCE - BILLS 090007 and 090016 COMMISSIONER RICHARDSON: Say that again.

Are we giving out any million-dollar discounts? COMMISSIONER RICHARDSON: Yes. The School District of Philadelphia gets $2 million --

Repeat that. COMMISSIONER RICHARDSON: The School District of Philadelphia gets $2 million. The University of Penn and HUP get $1.1 million.

Are we giving out any over $500,000? COMMISSIONER RICHARDSON: Yes -- no. 19

Any over $100,000? COMMISSIONER RICHARDSON: Yes. Temple University, 457; Thomas Jefferson Hospital University, 424; Children's Hospital, 209,000; Drexel University, 161,000; Tenant Health System/Hahnemann, 55 3/10/09 - FINANCE - BILLS 090007 and 090016 159,000; Albert Einstein Plaza, 157,000; the Archdiocese of Philadelphia, 117,000.

Thank you.

Can you flip that to the other end of the continuum? You've given us samplings of your large. Can you provide samplings of your smaller? COMMISSIONER RICHARDSON: We don't have that data today. We can probably provide it to the Committee, though.

Thank you, Madam Chair. COMMISSIONER RICHARDSON: Sorry, Madam Chair. I'll just go at $100. Well, I'll go 75. Vestry St. Gabriel's Episcopal Church is $76.

Schools, small schools. If they've given us the School District, is there any charges in on the bottom end of that continuum? 56 3/10/09 - FINANCE - BILLS 090007 and 090016 COMMISSIONER RICHARDSON: These are mostly churches.

Okay, but we'll look forward to that type of information that you'll be providing to the Chair. Thank you, Madam Chair.

The list that you're reading from, does that include all of the non-profits who receive the discount and the amount they get? COMMISSIONER RICHARDSON: Yes, Madam Chair.

Could we have that? COMMISSIONER RICHARDSON: Sure.

All right. You'll let us have that. Okay?

Madam Chair, as a follow-up, will Act 48 allow you to cut $2 million from the School Board like that? COMMISSIONER RICHARDSON: Act 57 3/10/09 - FINANCE - BILLS 090007 and 090016 48, you said?

Yes, sir. COMMISSIONER RICHARDSON: I don't know.

Well, it would be good to find out.

The Chair recognizes Councilman Greenlee.

Thank you, Madam Chair. Kind of along the same lines of asking for information, I was wondering if you could -- and maybe this came out and I missed it. When you provide this information, on the higher priced bills, could you break down like what this would mean, this increase or what taking away the discount would mean over that five-year period of time? Am I making sense? COMMISSIONER RICHARDSON: I can give you what we said for the 3,200 accounts. For FY 2010 is $1.9 million. 58 3/10/09 - FINANCE - BILLS 090007 and 090016 By FY 2013, it will be $9.8 million.

I guess I'm thinking more -- on average? COMMISSIONER RICHARDSON: That would be the revenue that would be generated.

I guess I'm thinking more -- I'm trying to get like a real picture of the big non-profits, if you will, versus the smaller ones and how much of an increase this would be. I guess the point I'm getting at -- and I'm not trying to dispute the need that Councilwoman Blackwell is talking about, but I would think if you're talking about a small bill, like some of these small churches, non-profits, and you break that discount over -- or you take away that discount over a period of time, five years, you're not talking a tremendous increase each year. I'm trying to get some real numbers here what that average would be. 59 3/10/09 - FINANCE - BILLS 090007 and 090016 I don't know -- you may not have it now. I'm saying if you could provide that, I'd like to see what in kind of real numbers we're talking about. COMMISSIONER RICHARDSON: I have numbers here for one church in particular in North Philadelphia, for example. FY 2010, their bill would increase by $58 a month to an actual increase of $699. By 2013, it would increase to $291 and an annual bill of about $3,400. That's the end of the five years.

At the end of five years, it would go up to -- COMMISSIONER RICHARDSON: To 291.40, with an annual bill of $3,496. That's the end of the five-year phaseout.

Okay.

They would be paying $3,200 a year? COMMISSIONER RICHARDSON: That would be over 12 months, yes. At the end of five years, it would be. 60 3/10/09 - FINANCE - BILLS 090007 and 090016

They would be paying 3,200 more over five years? Is that what you're saying? COMMISSIONER RICHARDSON: No. 6 That's what their bill would be at the end of five years.

As opposed to? COMMISSIONER RICHARDSON: Currently, it would be about 699.

A year? COMMISSIONER RICHARDSON: No, no. Sorry. That's what it would increase to a year.

What's their bill now? COMMISSIONER RICHARDSON: I don't have their bill now.

See, that's what I'm trying to get. I'm trying to figure out how much of an impact this would have. And I'm not minimizing it. I'm just saying real numbers is what we're looking at, how 61 3/10/09 - FINANCE - BILLS 090007 and 090016 much a church like that or whatever that non-profit was, what's their bill now and what would it be in five years, and break it down over that period of how much of an increase it would be each year. That's what I'm trying to get at.

It is ironic, if I may say, Madam Chair, that we know for the great institutions, we know about PHA, you could mention that to the penny, but the small organizations you don't know. You can't even figure out the money. It's not fair. It's not a fair playing ground, and that's one of the reasons why I believe that we need to hold this bill.

I'd like to move on with this hearing and -- one question I do want to ask you, though, and I'm not picking on Penn, but since it is the big gorilla in the room, if they are paying $1 million on the educational portion of the University, do you have a breakout of their total bill? How do you 62 3/10/09 - FINANCE - BILLS 090007 and 090016 determine the discount on what portion of the bill? You say they don't get the discount on the dormitories. DEPUTY COMMISSIONER CLARE: Right. Normally the discount is only applied to accounts that are entitled to the discount. So other accounts; for instance, a dormitory account, would be listed in our system as a non-discount account and it's not captured in these numbers we're sharing.

Do you know how much they're paying for the non-discount water service? DEPUTY COMMISSIONER CLARE: We do not. We haven't aggregated that by owner. Our system is fairly new and we haven't been able to capture the non-discount accounts for the charitable institutions.

So if they're paying a million dollars, they get a discount on a million dollars? DEPUTY COMMISSIONER CLARE: 63 3/10/09 - FINANCE - BILLS 090007 and 090016 Correct.

Well, how do you figure out their other bill? DEPUTY COMMISSIONER CLARE: Well, their other bill is billed at general service rates. So whatever the consumption is for that meter size, that's exactly what they would pay.

So do you have any idea of what they pay in non-discounted service? DEPUTY COMMISSIONER CLARE: I don't have that information, Madam Chair.

Could you get that to us, too? DEPUTY COMMISSIONER CLARE: Sure.

Thank you very much. Okay. Let's move on. Any other questions for this panel? (No response.)

Moving on to Bob Archie -- yes. Councilman Green. 64 3/10/09 - FINANCE - BILLS 090007 and 090016 Don't leave yet, gentlemen. Delayed question.

I'm sorry. Just one quick question, and, that is, if this measure were to pass in either form, the original proposal or the amendment proposed, would the Water Department lower residential and other commercial rates by $9 million? Would the savings actually go to the ratepayers? DEPUTY COMMISSIONER CLARE: We would not.

Thank you.

Let us have Philadelphia Housing Authority. (Witnesses approached witness table.)

Good afternoon, Madam Chairperson, members of the Committee on Finance. My name is Robert Archie. I'm a partner at the law firm of Duane Morris LLP and I am counsel to the Philadelphia Housing Authority, also known as PHA. 65 3/10/09 - FINANCE - BILLS 090007 and 090016 I've submitted my testimony in written form, so I'm going to paraphrase some of it so I will not have to read it verbatim.

Thank you.

Sitting next to me is our associate. Shannon, why don't you introduce yourself.

Hi. Shannon Sutherland, Duane Morris.

Proceed.

I'm here to testify on behalf of PHA in opposition to Bill No. 090016. " If you'll just direct your attention to those two sections. And these sections of the Code are designated for public housing water and 66 3/10/09 - FINANCE - BILLS 090007 and 090016 sewer rates and charges for the properties of PHA. These proposed amendments provide for the total elimination of PHA's five percent reduction off of the Water Department's water and sewer service and quantity charges. The Philadelphia Water Department today provides a discount of more than 21,000 accounts for individuals and entities that fall into six categories, and these categories are institutions of purely public charity, public and private schools through Grade 12, universities and colleges, places used for actual religious worship, residence for low-income senior citizens, and the public housing properties of PHA. As of today, all 21,000 of these accounts receive a percent discount from the 22 Water Department. Only one institution, 23 PHA, receives a different level of 24 discount, which is five percent. 25 PHA is a public charity similar 67 3/10/09 - FINANCE - BILLS 090007 and 090016 in every facet to every other charitable institution, and those accounts are 3,400 accounts, which receive a percent 5 discount. Almost all of PHA's residents 6 are financially similarly situated as the 7 17,900 individuals currently receiving 8 the water and sewer discount by 25 9 percent. 10 The residents living within 11 PHA's properties have been the victims of 12 a current classification as to who does 13 and who does not get the discount. The 14 proposed ordinance you are considering 15 today eliminates the discount. It solves 16 the arbitrariness of the current Code 17 provision, but leaves the poorest of the 18 poor Philadelphians adversely impacted 19 because of the increased costs being 20 passed by the City to PHA. 21 PHA is a not-for-profit housing 22 authority. As the nation's fourth 23 largest housing authority, it is the 24 largest landlord in the Commonwealth of 25 Pennsylvania, serving approximately 68 3/10/09 - FINANCE - BILLS 090007 and 090016 81,000 low-income residents of the City of Philadelphia. The average annual income of PHA households is less than $10,000, and approximately 75 percent of all PHA residents live at or below the poverty line. Some 88 percent of PHA's households are below 30 percent of the area's median income. PHA's purpose is to provide safe and sanitary dwelling accommodations and related services for persons of low income and to prevent the economically and socially disastrous conditions caused by a shortage of decent, safe and sanitary dwellings within the reach of persons of low income. Notwithstanding these facts and statistics, under the proposed bill, PHA is being treated like all other charitable institutions even though its residents are all low-income individuals. The City of Philadelphia itself has recognized that PHA provides significant services to the City residents. Without the five percent 69 3/10/09 - FINANCE - BILLS 090007 and 090016 discount, PHA's ability to provide many of those significant services to the tens of thousands of low-income residents may be well threatened. PHA participated in the rate hearings before the Philadelphia Water Commissioner and requested that PHA be provided with the same percent 10 discount now being considered for 11 elimination and is being given to more 12 than 21,000 accounts of other charitable 13 organizations and low-income individuals. 8 million. Today, the Water 20 Department provides the charitable 21 discount to 3,478 accounts. By way of 22 example, the 1260 Housing Development 23 Corporation, a non-profit corporation 24 providing housing to low-income persons, 25 essentially the very same service as PHA, 70 3/10/09 - FINANCE - BILLS 090007 and 090016 is listed as a charity and receives a 25 percent discount.

23 billion for Fiscal Year 2008 and which charges nearly $50,000 per student for tuition, room and board each year, also receives a percent discount. Unlike 11 universities and colleges which can raise 12 tuition and room and board rates to cover 13 increased costs, however, rent for public 14 housing is dictated by the federal 15 government. PHA cannot raise rents to 16 cover increased utility costs. 17 Nevertheless, these well-endowed entities 18 enjoy a 25 percent discount while PHA, 19 which serves thousands of low-income 20 Philadelphians, receives only a five 21 percent discount. 1 million per 25 year, to 17,900 senior citizens with 71 3/10/09 - FINANCE - BILLS 090007 and 090016 incomes less than or equal to $27,600 per year. Even though all of its residents are low income and a large number of its residents are senior citizens, PHA receives only a five percent discount. At the rate hearings last year, PHA asked that its request for a 9 percent discount be considered in setting 10 the new rates. The hearing officer found 11 that he did not have the authority to 12 grant PHA's request and directed PHA that 13 if it intended to pursue a change in its 14 water and sewer rates, such a change 15 required action by City Council. 16 Accordingly, PHA requested on September 17 18, 2008 that City Council consider 18 adoption of Bill No. 080626, which we 19 believe is still pending before this 20 Committee. Our client sought under the 21 bill to increase its reduction to 25 22 percent, not totally eliminate it. 23 PHA, like other governmental 24 entities, is facing financial challenges. 25 To enact this legislation will further 72 3/10/09 - FINANCE - BILLS 090007 and 090016 tighten services for its tens of thousands of residents of PHA, whose quality of life has already been impacted by the reduction of federal subsidies. Without at least a five percent discount on water and sewer service and quantity fees that is presently percent lower 9 than the reduction authorized for other 10 non-profit institutions providing the 11 exact same services as PHA, the ability 12 to provide like services going forward 13 over the next four years will be greatly 14 difficult, increasingly difficult. 15 Let me explain the hardship to 16 the members of this Committee. Most of 17 PHA's funding comes from the United 18 States Department of Housing and Urban 19 Development, known as HUD. HUD has 20 decreased the level of funding for PHA. For Calendar Year 2007, HUD funded PHA at 83 percent of what HUD's own formula said it needed. The 83 percent represented a loss of operating subsidies of $18,728,436. 9 percent, or a $13 million reduction of operating subsidies. The cumulative effect of these budget constraints have already placed a significant strain on PHA, its operations and its 81,000 residents. Over a period of years, PHA had systemically reduced its workforce as it has tried to maintain or improve the status quo. In January 2007, however, PHA was forced to lay off approximately 350 employees, about 13 percent of its already lean workforce. 14 In 2000, PHA had 2,508 employees as of 15 March 31, 2008 -- I'm sorry. In 2000, it 16 had 2,508 employees. As of March 31, 17 2008, PHA employed less than half that 18 total. 19 Of all the programs that have 20 been cut, public safety has been hit the 21 hardest. In 2007, PHA was forced to cut 22 approximately 20 police officers and 12 building lobby monitors from its already limited ranks. The layoffs have also significantly hit PHA's maintenance 74 3/10/09 - FINANCE - BILLS 090007 and 090016 operation, forcing tenants to wait a longer time period for repairs and requiring that tens of thousands of people on PHA's waiting list wait significantly longer for units to become available for occupancy. What this means is that PHA's reduced operational funds are already thinly stretched, particularly in areas with a real impact on the physical comfort and safety of PHA's tens of thousands of residents.

Against this already strained backdrop, PHA's utility and services costs are dramatically rising. In 2006, PHA paid an average of 88,000 per month for refuse pickup. Today it pays an average of $134,500 per month for these services. The Philadelphia Gas Works recently raised gas rates for PHA's properties, and PECO is planning a rate increase. 1 million over a four-year period. Each dollar increase in utilities and services costs means a dollar-for-dollar reduction in PHA's ability to meet the other operating costs. PHA is left without a mechanism for covering these rising costs. HUD does not reimburse PHA for utility expenses, and unlike private landlords, housing authorities are not permitted to raise rents to cover rising costs. PHA fully understands that there is an economic crisis across this nation and within the City. Deciding who gets the benefits of a discount and who does not, however, must be carried out fairly and in a non-arbitrary fashion. There is no rational basis why PHA, a charitable organization and the landlord for thousands of low-income senior citizens, receives a five percent 76 3/10/09 - FINANCE - BILLS 090007 and 090016 reduction on its water and sewer charges when a similarly situated senior or charitable organization on the same rung of the economic ladder living across the street from a PHA building gets a 7 percent discount from the City. 8 The City's need for additional 9 revenue should not be the sole basis for 10 this proposed ordinance. City Council 11 must take into account the financial 12 hardship confronting PHA's management. 13 Without additional operating subsidies, 14 PHA will not be able to maintain the 15 status quo for its residents. For years 16 PHA has been treated differently than the 17 other 21,000 accounts of charitable 18 organizations. Now PHA asks that it 19 continue to be treated separately by City 20 Council and that it be excluded from this 21 proposed ordinance. 22 I thank you for your attention 23 and consideration. 24 COUNCILMAN DiCICCO: Madam 25 Chair? 77 3/10/09 - FINANCE - BILLS 090007 and 090016

Thank you very much. The Chair recognizes Councilman Kenney.

No. 7 COUNCILMAN DiCICCO: I just have a -- I was just informed that recently -- you may not be aware of this -- the stimulus money we're talking about, $90 million will be going to PHA.

Yes, but all that money is going for capital, not operating subsidies. All capital improvements, nothing to do with operating subsidies at all. That's the qualifications on the stimulus money. COUNCILMAN DiCICCO: All right. I'll come back. I have some other things. Thank you.

Councilman Kenney.

Thank you, Madam Chair. Mr. Archie, I appreciate your 78 3/10/09 - FINANCE - BILLS 090007 and 090016 testimony and the sincerity and honesty which you've given it to us, and you've been around a long time, so you've seen a lot of different crises in our city and in our nation.

I certainly have.

I think I just read this morning that your firm itself had to maybe get rid of a number of people you didn't want to get rid of because the economic situation is so bad. And, of course, I guess when you lay people off in your own firm, it makes you feel bad about people being out of work.

I hope I'm not one of them when I get back.

No, I don't think you will be. I guess my question is more general and it's more, I guess, macro in its substance. What's coming next week is going to be devastating. I mean, really terribly devastating. I haven't seen all the details yet, but everything 79 3/10/09 - FINANCE - BILLS 090007 and 090016 that we've been talking about and hearing, it's going to be a bear. This one seems to be a pretty relatively easy lift. If we can't do the easy lifts before the bear is released from the cage, what are we going to do? I mean, I don't know how you can give a discount to anybody when you're broke. I mean, we're basically to the point where over the next five years, we're projected to be somewhat broke. And unless the stimulus and the economy turns around and we get this next two years, three years where we can all get back where we want to be, what we're going to face on March 19th is going to -- this is going to pale in comparison to that. And if we're going to get bogged down with the light lifting, God help us on the heavy lifting, because that's next week and forward. So I do appreciate what you're saying. I do understand it. It's heart-wrenching in some cases. A lot of 80 3/10/09 - FINANCE - BILLS 090007 and 090016 the things that we've faced in the last number of months have been heart-wrenching. I mean, for me, issues relative to the Fire Department are extremely personal and they're very difficult, but I don't know what else we can do other than to try to save as much money as we can so we can continue to exist. And I don't diminish the small non-profit or the poor person. I mean, if you look at some of your own investments and some of the things you've been saving over the years, they're starting to go away, too. I hate to even go on the website to look and see how much money we've lost in the last year, year and a half. But next week begins probably the most difficult period of time that we've had, probably more so than 1992, which was pretty much a bear period of time, too. So I just wanted to say for the record that I'm worried about next week 81 3/10/09 - FINANCE - BILLS 090007 and 090016 and there on after if this kind of thing relative to a discount from an entity that doesn't have much money available to it to do some of the things it needs to do, I don't know where we're going to go, but I'm hoping that we can just bear up and deal with this as best we can until we come out of it. I have confidence in this Administration nationally. I voted for the President. I have confidence in his policies and the people around him, but I think we're going to have a two, maybe three-year period of this and we're going to have to just, almost in a wartime, hunker down and get ourselves out of it, and this to me seems not an irrational approach.

Point of order, Madam Chair, and may I say that the Water Revenue Fund is not broke. This money does not go for all of those things that we need in this city. The Water Revenue Fund is not broke and, 82 3/10/09 - FINANCE - BILLS 090007 and 090016 therefore, the whole -- it's a whole different -- the question is different than that which is raised.

I just beg to differ that it's not different, that we're all in this together --

And it isn't a heavy lift -- it's not a heavy lift if you can lift it. It's a heavy lift if you can't.

The point of the matter is -- and I just respectfully disagree -- that we're all in this together. It's not separate funds. It is all City taxpayer and ratepayer revenue. Certainly funds are segregated to be spent in certain things and restricted in certain areas, but we are all in this together, every single taxpayer, every single ratepayer, and I can't -- I can understand Mr. Archie's argument better than I can understand the other non-profits' argument. Not that we'll necessarily agree in the end, but I 83 3/10/09 - FINANCE - BILLS 090007 and 090016 can kind of understand the people he's representing better than I can understand the non-profits that have, again, as Councilman DiCicco said, served this region extremely well but have not paid real estate taxes for a long, long time and have not paid the full amount of the water bill for a long, long time. This is terrible, this stuff we have to do. No one is taking any joy or glee in this, and as I said, next week it's going to be a lot more desperate when we see exactly what we're facing than we are what we're facing today. And I just, for this particular Councilmember's opinion, I just think we need to do what we have to do to save our city and to get us into the next couple years so that we can rebound.

We disagree.

And we understand that. What we have are a lot of people who want to testify. So we'd 84 3/10/09 - FINANCE - BILLS 090007 and 090016 like to move forward. Do you have any testimony, young lady?

No, thank you.

When are you going to pay your million-dollar water bill?

The million-dollar water bill is a result of a dispute. There was a water main break at the Abbotsford Homes. The Water Department was contending that the property was owned by the City of Philadelphia, the water main, and PHA was contending that it was not their responsibility. PHA went and repaired the water main because it was adversely impacting the residents who lived in Abbotsford Homes. The water main has been repaired. Now the City is saying -- or the Water Department is -- that you owe us a million dollars, and PHA has said, No, we don't owe you that. We repaired it. It is now in litigation. They're suing and we're counter-suing. 85 3/10/09 - FINANCE - BILLS 090007 and 090016

Thank you for clarifying that. We didn't want you to leave with the impression that PHA has not paid its water bill. COUNCILMAN DiCICCO: Well, they haven't paid. They're disputing it.

Well, they're in court, so that's due process. COUNCILMAN DiCICCO: Thank you, Madam Chair. Mr. Archie, just for the record, Councilwoman Brown had asked me, the residents of PHA do not pay the bill, it's paid by the Authority, is that correct, the water bill?

That's correct. They pay -- excuse me one second. COUNCILMAN DiCICCO: Sure.

You're correct, they do not. COUNCILMAN DiCICCO: The Authority pays the bill?

Correct. COUNCILMAN DiCICCO: And that 86 3/10/09 - FINANCE - BILLS 090007 and 090016 money comes out of its operating budget?

That's correct. COUNCILMAN DiCICCO: And where does the operating money come from for the budget?

From the Department of Housing and Urban Development. But the budget is, as I stated in my testimony, it was only 83 percent one year of the 100 percent. COUNCILMAN DiCICCO: I understand the cutbacks. I'm familiar with it, and we've all experienced those cutbacks. But it does come from HUD; it doesn't come from the tenant?

Right. HUD was not permitting PHA to pass any increases in water and sewer rents. COUNCILMAN DiCICCO: Thank you. I don't have any further questions. Thank you.

Any other questions or comments? (No response.) 87 3/10/09 - FINANCE - BILLS 090007 and 090016

Could we move forward, please. Thank you so much for your testimony.

Thank you.

Next we have Asia Coney, Tenant Support Services, PHA. Why don't we call this panel since they all seem to represent the PHA complement. Corliss Gray, Portia Harrison, Geneva Beander, Christine Boyd, Rose Bryant, Nellie Reynolds. Thank you. (Witnesses approached witness table.)

Thank you very much for coming down to testify this afternoon. Would you please identify yourself and present your testimony. Thank you.

Good afternoon, Chairperson Tasco and Chairperson Blackwell -- I'm sorry. We were at a conference and my voice is going in and out -- and the Finance Committee. For the record, my name is Asia Coney and I'm 88 3/10/09 - FINANCE - BILLS 090007 and 090016 the President of the Resident Advisory Board and the Director of Tenant Support Services, Inc. and I'm here today to provide testimony that's amending Bill 6 No. 090016. We believe the passage of this proposed amendment causes great concern, not only to the agency, to non-profits and others, who will not be able to make up the financial differences resulting in and causing significant hardship with its passage. To make a point, we are here clearly concerned about PHA, but also we network with a lot of non-profits and other agencies that provide services to PHA. So while we are not affected by paying a water bill, there are significant non-profits that provide services to the residents of public housing via training programs or assisting with financial literacy and so on. So we're also here to support those non-profits as well. 89 3/10/09 - FINANCE - BILLS 090007 and 090016 And if you allow me, I would like to start by letting you know -- and I'm sure you're aware -- the rate increases that have already been proposed by PHA. So if you will allow me, I just want to state that as of July 1st of 2008 -- and we meet with the Housing Authority once a month and the leadership from around the City, so we're constantly informed of bills being increased and rates being increased. And even though we're not going to receive the five percent as the bill proposes, but there's still rate increases being imposed upon the Philadelphia Housing Authority. As of this year, July 1, there will be a 7.8 percent increase. July 1 of 2009, a 6.4 percent increase. 2010, July 1, a 6.6 percent increase, and July 1, 2011, a 6.5 percent increase to the water bill. The proposed amendment we believe may result in the agencies that are serving as our clients who are in 90 3/10/09 - FINANCE - BILLS 090007 and 090016 need of these services may have to make choices in between how many clients they may service as a result of these increases, where maybe they would be able to serve five or residents in a 7 particular service like financial 8 literacy, but as of a reduction, may have 9 to reduce that number. 10 Just this morning I was talking 11 to the Executive Director at the Housing 12 Authority and he received a call that the 13 Zoning Commission is now looking at the 14 various charges that are being directed 15 at the Housing Authority, and they are 16 revisiting any fees associated with 17 building. And as we all know, the 18 Housing Authority has been really great 19 at improving some of the properties and 20 building the community. So now we're also going to be back here possibly revisiting the Zoning Commission and looking at the fees. I want to close by saying as we look at this and at this point of time 91 3/10/09 - FINANCE - BILLS 090007 and 090016 and history where whether you want to say it's a recession or a depression, but we certainly hope we are in a point of recovery. It appears that there's a war being waged on poor people and the agencies that service them. I'm sorry for my voice, but I did several workshops at the conference. And I just think that we really need to look at, at a time where we are trying to recover from a recession, the agencies that are tasked with servicing these clients and folks that need them may be very directly impacted in a very negative manner. Thank you.

Thank you very much. (Applause.)

Would you identify yourself for the record, please.

Good afternoon. My name is Corliss Gray and I'm the President of the Queen Lane Resident 92 3/10/09 - FINANCE - BILLS 090007 and 090016 Council and Treasurer of the Resident Advisory Board. I live at one of the Philadelphia Housing Authority's properties named Queen Lane Apartments. It is a public housing development which is located at 301 West Queen Lane. I am here to oppose amendment to Bill No. 090016 being submitted by Councilman DiCicco. Its passage, we believe, can lead to reducing the number of programs made available to residents by PHA. The Philadelphia Housing Authority has already been forced to reduce the number of police officers and cut its workforce. Thank you.

Thank you very much.

Good afternoon. My name is Geneva Beander. I am a resident at the Philadelphia Housing Authority. My development is at Bentley Hall, 1710 North Croskey Street, North Philadelphia. 93 3/10/09 - FINANCE - BILLS 090007 and 090016 I am opposed to the Bill No. 3 090016. I'm a little nervous. Unlike universities, PHA cannot raise rent to cover the cost of the increased utility bills. Public housing provides houses to seniors and families who have income between zero and 30 percent of the local area median income. Our rents are set at 30 percent of our household income. Thank you.

Thank you very much for your testimony.

Good afternoon. My name is Christine Boyd. I live in the Philadelphia Housing Authority and I am the President of the Resident Council at Harrison Plaza Development. I'm here to oppose the Bill No. 22 090016. HUD continues to underfund public housing. For the Fiscal Year 2008, the federal government funded PHA at 88.9 percent of a dollar for its 94 3/10/09 - FINANCE - BILLS 090007 and 090016 operating funds. Harrison Plaza is located at 1350 North 10th Street. Thank you very much.

Thank you very much. Portia, how you doing?

Fine. And you?

Good.

Good afternoon. My name is Portia Harrison. I'm President --

Speak into the microphone, would you, please.

I'm sorry. Portia L. Harrison. I'm President of the Oxford Village Resident Council. I reside at 6150 Algon Avenue in PHA Authority. I am here to oppose amendment to Bill No. 090016 being submitted by Councilman DiCicco. Its passage could possibly force the Housing Authority to have residents wait longer for repairs and maintenance. PHA already reduced the 95 3/10/09 - FINANCE - BILLS 090007 and 090016 number of maintenance staff in 2007, and residents have been forced to wait for months for necessary and needed repairs and this will exceed if this bill passes through.

Thank you very much. I thank all of you for your testimony, for taking time out to testify on behalf of PHA. Thank you.

Thank you.

We have one more person.

Oh, okay. You need a mike over there? We have to have you heard by the stenographer.

Good afternoon. My name is Rose Marie Bryant. I am the Resident Council President at the Liddonfield Homes, which is located at 8800 Jackson. I oppose this amendment of Bill 25 090016. Its passage will cause a 96 3/10/09 - FINANCE - BILLS 090007 and 090016 hardship.

Take your time. Take your time.

It will even for families needing housing...

Thank you very much.

I'm sorry.

That's all right. We got your name. We know you came down here to support PHA and your residents. We appreciate that. Thank you very much.

Hi. My name is Beatrice Randolph. I'm a resident at Liddonfield Homes. I'm Ms. Bryant's secretary. Good afternoon. I'm going to read her whole thing. Good afternoon. My name is Rose Bryant. I am a resident and the Resident Council President. I live at Liddonfield, which is located at 8800 97 3/10/09 - FINANCE - BILLS 090007 and 090016 Jackson Drive and one of the properties owned and operated by the Philadelphia Housing Authority. I also oppose the proposed amendment to Bill No. 090016 since its passage will cause the waiting list for public and assisted housing to become even longer and families needing housing faced with no hope of their needs being met. The increase will affect the turnover of vacant properties, and the outcome being it taking longer for units to be made available for rental. (Ms. Coney speaking without microphone.)

I beg your pardon?

I just want to acknowledge that also One Day At a Time and Stop N Surrender, representatives from those two agencies are here too as well.

Thank you. The record will show that One Day At a 98 3/10/09 - FINANCE - BILLS 090007 and 090016 Time and Stop N Surrender, which are both non-profit organizations serving a targeted population, are here and we thank you for coming down. Thank you.

Thank you so much.

All right. Next we have Reverend Shine, Reverend White, William Reinhold, Gus Fanelli. (Witnesses approached witness table.)

Good afternoon. Hi, Reverend White. I haven't seen you in a long time. Who is going to go first? It's up to you.

Madam Chairperson, the Honorable Marian Tasco, to the members of the Finance Committee and to my Honorable Councilperson, Sister Jannie L. Blackwell, to everyone present, my name is Arthur White. I'm Pastor of Christ Community Baptist Church in West Philadelphia. 99 3/10/09 - FINANCE - BILLS 090007 and 090016 I have come to oppose the bill 3 and the amendments that have been submitted to this committee. That will hurt more people than we know who provide needed services to hurting people in the City of Philadelphia. I am opposed to it because of the spirit it reflects and not necessarily the spirit that is meant. And what I mean by this, it reflects a spirit of selfishness, wanting to give yourself a stimulus by sucking some needed economic blood from those who are already hurting. To me, that's selfish, to try to meet your bottom line by helping those whose budgets already don't meet either. And to pass this bill or the amendments would hurt more people than we know, more than it will help the Water Department. And I also oppose it because not only does it reflect a spirit that's probably not the spirit that is meant by the proposer of this bill and the amendment, but it also reflects 100 3/10/09 - FINANCE - BILLS 090007 and 090016 uncharitableness of this city. This is Philadelphia, and I'm not sure whether or not this best reflects our love for all of our citizens, particularly the vulnerable ones who are -- who make up the majority of the ones listed under the charitable rates. I believe that there are some principles and values that should not be sacrificed because of economic woes, and the spirit of caring and the spirit of charitableness are two values that help make Philadelphia who Philadelphia is. So I say that these are not the times nor is this the city to do this kind of thing. And unless I have not been listening well, I don't hear the outcry from the other customers of the Water Department who are saying to the Water Department, Hurt those who are being serviced by charitable organizations so that we can get our stimulus that we want during this time of economic -- I don't hear them saying, 101 3/10/09 - FINANCE - BILLS 090007 and 090016 Hurt somebody else in order to help me. I believe all of us understand that it's hurting for all of us, and those of us who are in certain positions have to try to care more for those who are subject to be hurt the most, and to me, this bill does not do that. I'm not necessarily worried about Christ Community, but the other organizations as well, because we know at least in the religious community, we'll make a way somehow. God is going to make a way somehow, but so many others are going to be hurt by this. And I think I heard the Councilperson say in his introductory remarks that some people may feel that they're entitled to this charity. We didn't ask for it. The City out of its own bowels of mercy offered it, and, of course, we didn't turn it down. So we're not asking for it. It was given to us, and we believe that it served a needed purpose, and it continues. 102 3/10/09 - FINANCE - BILLS 090007 and 090016 Now, I rise to ask this Committee to not let this bill nor these amendments go through and hurt more Philadelphians at this wrong time than it will help the Water Department. Thank you, Madam Chair.

Thank you very much for your testimony. Nice to see you.

Nice to see you, too.

Reverend Shine.

Madam Chair Lady and members of this distinguished committee, I'm Reverend Robert Shine, Pastor of the Berachah Baptist Church in the West Oak Lane section of the City. Thank you for the belated invitation for me to come and to register my opposition to this bill. I come thinking of the true spirit of separation of church and state. To think that the Water Department would 103 3/10/09 - FINANCE - BILLS 090007 and 090016 need additional revenue and then to ask that this exemption be removed, it reminds me almost that if you begin with this, then whatever else is going to come in the future, that the church should remain a separate entity, separated from that of the state. Without due regard and recognition of it, then it is in my belief that eventually if this is approved and taken out of Committee and sent to Council, that someone else in the Council may think of some other ways by which the church. Now you have institutions that are exempt that are exempt with far greater funds, such as we heard in the testimony from the Water Commissioner, the million dollars for the University of Pennsylvania and others, some 100,000, some $450,000 exemptions. But when it comes to the faith community, both the Catholic and the Protestant, with the churches and the churches' need for this exemption, because the same people that 104 3/10/09 - FINANCE - BILLS 090007 and 090016 pay the tides in our churches are the same people for some degree that reside in the public housing, reside in the PHA homes, and as you've heard already, that they are impacted or would be impacted adversely should this bill pass. When we who know what's going on in the faith community; that is, the downsizing is impacting upon us significantly, we also know that there's a lot of joblessness and there's a lot of people in our congregations without employment, and, therefore, when we ask them, just as in the case here, that we may have to go before our congregations and ask them for increases in their tides and offerings in order to help defray the cost to operate our church facilities, this is what I would believe to be something that's duly unfair and unwise that it should be imposed upon the faith community, along with some of these other institutions. Regardless as to how it may be 105 3/10/09 - FINANCE - BILLS 090007 and 090016 viewed, that the tax dollars are needed, all of us know of what is happening in the -- in society and what's happening in our government, what the President is offering in his economic stimulus project. All of us are most aware of that. All of us are attempting, at least those of who are faith leaders, are attempting to do what we can to help stimulate his economy, but we do not believe that what is being offered here is fair to the faith community. Not only not fair, but we believe that there should remain this separation, and in that respect, when we take a look at all of that money that is being required, how much would the faith community be providing and how much would it do and what benefit or relief would the faith community get as a result of this. The Water Department has not offered a fair plan to its citizenry, particularly when the church -- when it lumps us all into one ball. Then what is the benefit that 106 3/10/09 - FINANCE - BILLS 090007 and 090016 we will get from the City if the City should decide to impose this? There needs to be some relief somewhere, because our people are extremely adversely being impacted by all of what's going on and even more so if this should happen to pass. I come to oppose it and will continue to raise opposition, and perhaps if you should convene another meeting, Madam Chair Lady, that maybe you want to see the entire faith community in Chamber registering their opposition to it, perhaps then raising a public outcry against this proposed bill. Thank you, Madam Chair Lady, and thank you, members of the Committee.

Thank you very much. (Applause.)

Thank you for coming down. Yes. Would you identify yourself for the record, please. 107 3/10/09 - FINANCE - BILLS 090007 and 090016 PASTOR McCABE: Yes. My name is Pastor Delores McCabe. I'm the Pastor of Millcreek Baptist Church in West Philadelphia just off of Lancaster Avenue, and I certainly greet you, Honorable Chairwoman Marian Tasco. I thank my own Councilwoman, Honorable Jannie Blackwell, for allowing me to be here today. And I could go and list the others, Blondell Reynolds Brown and Goode and Curtis Jones. All of them have been at our church from time to time. I come today to oppose Bill 15 090016, and I oppose it from a different perspective than some of the others who have spoken, because I think that we are actually in partnership with the City, and I think that's different than charity. And so I don't want us to think of this discount as charity, but I want to think of it as your part of the partnership, because we indeed serve the poorest of the poor. Many of the people that we 108 3/10/09 - FINANCE - BILLS 090007 and 090016 serve, many of the people that we make aware of various health concerns and issues -- Reverend White is a key person for helping with HIV and AIDS awareness, and there are other things that we do. We feed the hungry. We give clothing. Many of these people are not even members of our congregations, but yet we indeed are in partnership with the City of Philadelphia in helping the poorest of the poor. My community is first in a lot of things, first in drugs and alcohol, first in crime, first in single-parent households, and I could keep going on of all the different negative firsts we have, but we have, with our limited resources, because I happen to be one of the -- Pastor of one of the smaller churches here. With our limited resources, we do everything that we can to make this city a better place and to give people a higher quality of life. And so I'm asking you, with the 109 3/10/09 - FINANCE - BILLS 090007 and 090016 focus of partnership, that we partner together to help those who are the least among us in terms of financial resources to accomplish what they have to accomplish in order to have some quality of life. And so we ask you to oppose this bill. Because we give all of our resources, everything that we have, we're giving that to people who are less fortunate. And so if we pay this additional amount, that comes right out of the mouths of those people who we are all saying that we're committed to serve. I thank you for allowing me this time. (Applause.)

Thank you very much. Is this Reverend Fanelli?

Bill Reinhold.

Bill 23 Reinhold. Thank you, Mr. Reinhold.

My name is Bill 25 Reinhold. I'm the Associate for the 110 3/10/09 - FINANCE - BILLS 090007 and 090016 Presbytery of Philadelphia for Mission Partnerships in Urban Ministry. I want to thank the members of the Committee for allowing us this opportunity to share with you the impact the suggested water rate increase will have on churches and non-profits in this city. Now, we do recognize that balancing budgets is hard work, particularly in these grim economic times, and we appreciate that you are exploring all the options available to you and also your willingness to hear us today. I represent over 50 congregations of the Presbyterian Church USA in the City of Philadelphia and another 80-some in the counties around, but 50 here in the City, and our concern is shared, as you have seen, with many other faith communities across the City. In previous years, the City has wisely recognized the contribution of the faith community and other non-profits to 111 3/10/09 - FINANCE - BILLS 090007 and 090016 the social well-being of the City. Our faith commitment leads us to feed the hungry, to clothe the naked, to comfort those who are bereft of any other support. And the social contract that was just spoken of in which we operate looks to the churches and other faith communities as an important part of the web of social supports that keep this and other cities going. Now, a percent increase in 13 water rates may not seem like much, but 14 it is the water that goes into the soup 15 of our soup kitchens, it is the water 16 that runs the showers of our homeless 17 shelters, it is the water that washes 18 clothes of the families in the interfaith 19 hospitality networks across the City, the 20 water that runs through the boilers that 21 keep warm our young people in 22 after-school programs, and it is the 23 water that washes the floors of our 24 daycare centers. 25 Long ago, Pharaoh learned from 112 3/10/09 - FINANCE - BILLS 090007 and 090016 Joseph to set aside out of the bounty of the seven good years for the lean years to come. So we ask you not to take from the lean harvest now at a time when our churches and other faith communities are asked to step up their giving to meet the expanding needs of our neighbors. Thank you very much. (Applause.)

Thank you very much. We want to certainly thank you for coming in to testify. We certainly understand your role that you play in the community. I'm a member of Bright Hope Baptist Church and we run a kitchen for the residents in the North Philadelphia area who come in for dinner in the evenings, and clothing programs. So I certainly know that the churches provide and support the services that the City -- I mean, you're sort of like the base for what goes on to provide for those who are in need. So we thank you for coming in. 113 3/10/09 - FINANCE - BILLS 090007 and 090016

Thank you very much.

Reverend Jerome Bell, come on up. Nice to see you.

My pleasure. Thank you, Madam Chairman.

I must say to all of the witnesses today, they have been very respectful of time and have done very well in making their presentations in a timely manner. Thank you.

I will too adhere to the time constraints.

Thank you.

Madam Chairman, I'm Jerome Bell and I'm representing Damone B. Jones, Pastor of the Bible Way Baptist Church in West Philadelphia. I agree with a statement that was made, that we're in partnership. I'd just like to use it in another metaphor. We're in the same boat. And I 114 3/10/09 - FINANCE - BILLS 090007 and 090016 really am in opposition to 090016 in that it would tend to rock this boat at a very bad time. If I can just appeal to a real situation. I came to church one Saturday morning and we had a young lady, we had made room for her to stay overnight out of the cold. That meant we had to provide water, we had to provide heat, we had to provide light, and then we fed her the next morning. Now, some of the figures that I heard that are spread over the next five years shouldn't have us -- shouldn't have me sitting here appealing against this bill. Please consider the fact of people and put this money issue aside. We're going to make it. We're going to make it. At least that's what Barack Obama tells me. I think if we just hang on to what we got, we'll be all right. Thank you very much.

Thank you very much. 115 3/10/09 - FINANCE - BILLS 090007 and 090016 (Applause.) COUNCILMAN DiCICCO: Madam Chair?

The Chair recognizes Councilman DiCicco. COUNCILMAN DiCICCO: I just would -- and I hope people don't think this is not being fair, but just to kind of put this in perspective, and one of the reverends who spoke of the group of four or five that were just up, the church in question, the bill for the church in question is $309.42 annually. They're getting a $103.14 discount. So they're actually paying 206, which means if they didn't have the discount -- and correct me if I'm wrong, anybody at the Water Department -- they would be paying an additional $103 annually; is that correct? COMMISSIONER RICHARDSON: Yes. COUNCILMAN DiCICCO: So just to put this in perspective. That doesn't apply to everybody, but if you look at 116 3/10/09 - FINANCE - BILLS 090007 and 090016 the chart that I have, it's pretty significant, the number of smaller churches and institutions that are paying $500 or less annually, probably more in the range of $400 or less annually, whose rates would then go to somewhere in the $500 or $600 rate annually if this discount was removed. I'm not talking thousands and thousands of dollars. We're talking about a couple hundred bucks a year. And I know money is money, but I just thought I'd put that in perspective. Thank you.

Wilson.

Thank you, Madam Chair.

Councilman Goode.

Councilman DiCicco just shared that information with us, but I actually looked through the list and saw something very similar, but just to make the point as we're 117 3/10/09 - FINANCE - BILLS 090007 and 090016 considering what to do, the choice we're making is actually whether we're going to ask them for that money that will go to pay down debt service and money that is not needed to pay down debt service or whether we're going to allow them to retain that money to provide charitable services. And that's the choice that some people in the Committee are actually considering as we look at this. COUNCILMAN DiCICCO: Understood. Understood. But, again, the numbers I brought were at the end of the five years, it would be a hundred dollars compared to what it is today increase by removing the discount. It's not a hundred dollars annually. It will be at the end of the five-year period. So 20 bucks this year, $20 next year, just in round numbers, $20 a year for the next five years.

Madam Chair, if I might, everything is relative. Penn has been mentioned 118 3/10/09 - FINANCE - BILLS 090007 and 090016 earlier because even though all endowments are down at least 30 percent for these institutions, Penn is mentioned, but if you're paying -- everything is relative to what you pay. If you live in a place and you're paying $100 a month, then your water bill is less. Now, we're talking about institutions, but everything is relative. You can't compare in a vacuum when you don't deal with the size, you don't deal with what money comes into these churches, you can't compare in a vacuum and just throw out a number. I'd like to earn a million dollars too, but it's not like that. So everything is -- it's unfair to make comparisons in a vacuum when you don't talk about size, you don't talk about income, you don't talk about neighborhood, you don't talk about what institutions receive on a weekly or monthly basis. It's an unfair comparison. It does not put things in 119 3/10/09 - FINANCE - BILLS 090007 and 090016 perspective. COUNCILMAN DiCICCO: I'm not going to debate my colleague here, but I think it's important that some people recognize that what -- $200 may mean a lot to some people and to some people it may not mean anything to. I just wanted to put it in perspective, that in the majority of these cases, we're talking about 20, 40 or 50 dollars a year over the next five years as an increase. And I don't want to use Penn as the example, because I can tell you a lot of things about Penn and other educational institutions that are getting $2 million a year discounts. I don't know if it's fair. And these are people with endowments and these are people with students that are paying tuitions that cover those costs. So it's like apples to oranges here. It's not really apples to apples.

It really isn't. 120 3/10/09 - FINANCE - BILLS 090007 and 090016 COUNCILMAN DiCICCO: I don't what to debate you, Jannie, but --

Well, might I say, if you could just stay in my office for a week and see how many people we have to give money to just to get through to their next month's pay. (Applause.)

I mean, you can't compare. It does not put things in perspective when you, in a vacuum, pick out an institution and you don't deal with all the factors. That's not fair. That's why I don't support things like tax increases in a vacuum when you don't have uniform standards and rules that apply fairly to all people. This does not put it in perspective. COUNCILMAN DiCICCO: Well, the ratepayer can probably say why are they paying the full boat when these institutions are all getting a discount.

Because this doesn't even go for 121 3/10/09 - FINANCE - BILLS 090007 and 090016 services. It goes into a fund that already admitted that this just goes into their revenue fund and it does not go to services. And they admitted they can pay it. They admitted they can pay it. We have problems in the City and we have income problems, but this isn't one of the issues we have. That Water Revenue can pay for itself. They said they can pay. They say they're not broke. They keep so much money over in there. And so all of this really is a moot issue. This does not put it in perspective and it is not a fair comparison, and certainly we -- COUNCILMAN DiCICCO: We disagree. I respectfully disagree.

We definitely disagree.

Well, we'll work that out. Let's move on to the next group. We have Ms. Peggy Amsterdam, Greater Philadelphia Cultural Alliance; 122 3/10/09 - FINANCE - BILLS 090007 and 090016 Mr. James White, Philadelphia Association of CDCs; Ms. Laura Weinbaum, Project HOME; Ken Braithwaite and Brian Eury, Delaware Valley Health Council; and JEVS. (Witnesses approached witness table.)

Did we call the Delaware Valley Health Council, Cultural Alliance, Mr. White. Is Ms. Carla Puppin here from the Queen Village? JEVS is not here. Okay. All right. And then we have one other person after this panel. Good afternoon.

Good afternoon.

You'd like to identify yourself for the record and proceed with your testimony.

Good afternoon, Councilwoman Tasco and members of the Committee. I'm Peggy Amsterdam, President of the Greater Philadelphia Cultural Alliance, and on behalf of our 375 members, Board and staff, I thank you 123 3/10/09 - FINANCE - BILLS 090007 and 090016 for the opportunity to present this testimony today. Together, we all work to make the Greater Philadelphia area one of the foremost creative regions in the world. Surely we are facing tough times. With a looming deficit in Philadelphia, Harrisburg and on Capitol Hill, citizens and elected officials alike are working to find new ideas for cutting down on costs and increasing revenue. Our members in particular are vulnerable to the unpredictable changes that have made up our current economy. Though audience participation and attendance have remained strong in Philadelphia, thanks to its creative spirit, organizations are still under pressure. Endowments and charitable donations are already down significantly, and the longer this uncertainty lasts, the more likely organizations are to see a decline in individual donations and 124 3/10/09 - FINANCE - BILLS 090007 and 090016 patrons as well. Bill No. 090016 seeks to amend Title of The Philadelphia Code, which 5 would result in a gradual elimination of 6 the discount given to non-profits on 7 water and sewer rates through 2014. 8 Though I can see that this solution is 9 certainly attractive in the need for more 10 revenue, the cost could far outweigh the 11 benefit. According to our research in 12 the 2008 Portfolio report, utilities are 13 the fastest rising costs arts and cultural organizations are dealing with. Over the past six years, inflation has increased at a rate of percent, but 17 Philadelphia water rates have gone up at 18 least 60 percent, or three times the rate 19 of inflation. 20 Some of our member organizations, including the Walnut Street Theatre, Moore College of Art, the University of the Arts, currently benefit from the water discount. In these times, these established cultural institutions 125 3/10/09 - FINANCE - BILLS 090007 and 090016 are struggling to trim their own budgets in the face of shrinking revenues. Though the proposed change will not go into effect until July 1, 2010, dips in the economic cycle will hit non-profit organizations later than the general economy. In the best recovery scenario, arts and cultural organizations will not have fully recovered by next summer. Another blow to the bottom line through these water and sewer rate increases could force an organization like the Walnut Street Theatre to cut back on staff or the University of the Arts to cut back or eliminate educational programs. In working with our member organizations, the business community and residents, we've found that attraction to Philadelphia is due, in large part, to its rich arts and cultural community. Making it harder for some of these institutions to exist through an increase in their water and sewer rates would be 126 3/10/09 - FINANCE - BILLS 090007 and 090016 devastating in the long term. I hope you can work to reconsider and reevaluate this proposed legislation. Thank you for the opportunity to present this important information. The Cultural Alliance looks forward to working with the Finance Committee and City Council in finding the best solutions to weather the economy. Thank you very much.

Thank you very much.

Good afternoon, Councilwoman Tasco and members of City Council. My name is Ken Braithwaite and I represent the hospitals here in the Delaware Valley as well as across the State of Pennsylvania. My organization represents 250 acute care and specialty care hospitals across the Commonwealth, as well as 100 healthcare facilities here in the Delaware Valley, and specifically all of the hospitals here in Philadelphia. 127 3/10/09 - FINANCE - BILLS 090007 and 090016 My remarks today stand in opposition to Bill No. 090016, which would amend the City Code to reduce or eliminate the discounts for water, sewer and storm water bills for charitable institutions such as our hospitals. I appreciate the opportunity to be here today and to present the views of Philadelphia's hospitals and health systems on this important issue. We all recognize the fact that we are contending with the worst economic environment in more than 30 years, probably a lot longer than that. We very much appreciate the difficult circumstances that face the City, but we as hospitals are facing a similar crisis. As city and state governments struggle to balance budgets, the hospital community has urged our lawmakers across the Commonwealth to preserve funding and other economic protections that help maintain the hospital safety net for the most vulnerable among all of us. We are 128 3/10/09 - FINANCE - BILLS 090007 and 090016 facing an unprecedented state budget deficit. As I speak today, hospitals across the state stand to lose about $130 million through cuts to the Medical Assistance program, and that includes about $34 million of cuts here to hospitals in Philadelphia. Therefore, we urge the Council not to add to the economic challenges that are facing our hospitals, but instead look for other options. At this time, I would like to share with you a summary of the many economic pressures that hospitals are already facing and the important role that hospitals play in our economic life here in the City. In Fiscal Year 2007, hospitals contributed about $24 billion to the economy here in Southeastern Pennsylvania. We supported one in ten jobs. In both the City and the region, five of the ten largest employers are hospitals. Philadelphia hospitals 129 3/10/09 - FINANCE - BILLS 090007 and 090016 directly employ 40,000 people. And in Fiscal Year 2007, these employees provided more than $80 million in wage taxes to Philadelphia. By any measure, hospitals and the academic medical centers and our medical schools are a crucial part of our economy. I'm sure we all can agree to that. Historically, hospitals have also struggled to maintain the minimum margins needed to maintain long-term sustainability and be able to reinvest in ourselves. I think it's a misnomer that many people feel that hospitals have such deep pockets. On average, a hospital's margin is about one to two percent per year, and that's going down, especially as we face the current economic situation. As of December of 2008, nearly half the region's hospitals are already reported a moderate to significant negative impact on the day-to-day financial operation of our facilities. 130 3/10/09 - FINANCE - BILLS 090007 and 090016 The overwhelming majority of our hospitals forecast a moderate to significant negative impact on the financial stability of their facilities through the rest of this calendar year. While hospitals struggle with these fiscal and financial challenges, they face additional challenges in serving the patients and communities. As layoffs and job losses mount, more people find themselves without health insurance or the ability to pay for any type of healthcare. Hospitals, therefore, are providing more and more charity care and financial assistance and assuming more bad debt, which we get no remuneration for. As of December 2008, 50 percent of our hospitals had already seen a substantial increase in uncompensated care.

And in Fiscal Year 2007, before the current economic turndown, the nation's hospitals were already providing nearly $260 million in charity care and 131 3/10/09 - FINANCE - BILLS 090007 and 090016 uncompensated care, up nearly percent from the previous year, and we're sure that these numbers will only grow. I think we can all agree that Philadelphia hospitals are crucial components of the well-being of the economic fabric in Philadelphia. The difficult economic environment is severely stressing several of our hospitals, and I can assure you that any additional economic burden, including the potential closing of any City clinics, would continue to mount and press even a greater burden on us and could produce drastic results, including increased staff reductions, which a couple of our institutions have already announced, and the closing of service lines, as well as perhaps the entire closing of our hospitals. So I would hope that you would work with us and understand the situation that we're in, because we feel that there are other amenable options for us that we 132 3/10/09 - FINANCE - BILLS 090007 and 090016 could work towards. Thank you very much for the time that you've afforded me this morning.

Thank you very much for your testimony. Mr. White.

Good afternoon, Madam Chair, distinguished Councilmembers. Thank you for the opportunity to testify. I'm James White. I'm the Policy Coordinator of the Philadelphia Association of CDCs. We're a citywide association of 75 community development corporations and other non-profit organizations working to revitalize our neighborhoods and address the needs of community residents. I am not going to echo a lot about what we know about the current economy and the global financial market and how we're in a downward spiral. We all read the paper. I'm just going to get to our point as to why I'm here. 133 3/10/09 - FINANCE - BILLS 090007 and 090016 The proposed elimination of the discount water and sewer rates are particularly problematic for sponsors of affordable rental housing. As costs of operating rental housing, including insurance, maintenance, gas, electric and water and sewer, have increased, developments have become more financially unfeasible to operate without losing money. While owners of market-rate rental housing and commercial properties can pass on their costs to tenants, public financing for affordable rental housing precludes the owners from doing so by the restrictions of their rent, even if low-income tenants could afford it. Especially given the Administration's decision to cut funding for affordable housing from the Philadelphia Housing Trust Fund, these proposed changes will force sponsors to cut other services to tenants to make up for increased costs or make additional rental developments financially 134 3/10/09 - FINANCE - BILLS 090007 and 090016 infeasible to continue operating. For instance, a local non-profit uses a comprehensive approach to assist homeless families to achieve stability through their shelter and affordable housing program, as well as on-site counseling, employment, parenting and youth programs. The non-profit provides housing to more than 150 homeless families per year. The non-profit's current estimated monthly water and sewer bill before the discount is $5,300. The percent discount 15 reduces the bill to slightly less than 16 $4,000, resulting in an annual savings of 17 about $16,000. These savings lowers the 18 non-profit's cost to operate their 19 facilities and allows its management and 20 staff to keep providing safe and 21 affordable homes and other supportive 22 services to homeless families that would 23 otherwise not have a home. 24 Elimination, including a phased 25 elimination of the water and sewer 135 3/10/09 - FINANCE - BILLS 090007 and 090016 discount, would create additional economic burden upon charitable non-profits, especially providers of affordable rental housing, and wouldn't provide any significant help to the City to solve its budget problem. Many non-profits in our city are experiencing high operating costs for their rental developments and dwindling sources of revenue and cannot afford to absorb the impact of the additional annual operating costs that this proposed change would create. We urge you to table this bill 16 and not release it from committee. If for some reason the Committee were to decide to move this bill, it would be imperative for City Council to amend it to maintain an exemption for affordable housing, affordable rental housing. Thank you.

Thank you.

Good afternoon, Madam Chairwoman and members of the 136 3/10/09 - FINANCE - BILLS 090007 and 090016 Finance Committee. My name is Carla Puppin and I'm a member of the Bel Arbor Community Garden, located a few blocks from the Italian Market, and I speak on behalf of all community gardens and gardeners in Philadelphia. I'm asking that you make an exception in your proposed Bill 090016 to allow community gardens to continue to receive the charitable rate for water service. Community volunteers have worked with Pennsylvania Horticultural Society's Philadelphia Green program since the 1970s to create community gardens on vacant, trash-filled lots. In the early years, gardens applied for permits through the Philadelphia Water Department to use nearby hydrants. By the late 1990s, the Philadelphia Water Department was locking many neighborhood hydrants due to contractor and community abuse. While acknowledging that community gardeners were responsibly 137 3/10/09 - FINANCE - BILLS 090007 and 090016 using the hydrants, the Water Department wanted them to find other resources. In 2001, the Water Department led meetings with representatives of the Horticultural Society and the Neighborhood Gardens Association to work out how these gardens with water services could be a part of the charitable rate program. By 2008, community gardens, 11 including mine, were part of the 12 charitable rate program. Thirty-five 13 community gardens participate in the City 14 harvest program, in which we grow 15 vegetables, herbs and fruit to donate to 16 our local food cupboards. Between 2006 17 and 2008, our gardens donated 38,000 18 pounds of fresh, organic, locally grown 19 produce to these food cupboards. At 20 least half of our community gardens are 21 in lower-income neighborhoods, where 22 increased costs for water would be especially burdensome. The Philadelphia Water Department led the effort to get gardens 138 3/10/09 - FINANCE - BILLS 090007 and 090016 off hydrant use. The Water Department worked with the Horticultural Society and the Neighborhood Gardens Association to establish a policy of water use for gardens. It has been successful, and the Water Department continues to support it. Please continue the charitable rate for our community gardens. Thank you.

Thank you very much. Thank you. Any questions or comments for members of this panel?

Yes, Madam Chair.

Councilwoman Blondell Reynolds Brown. Do you have a question?

No. 21

Thank you all very much. We're looking for Ms. Madeline Shakumba (ph). (Witness approached witness 139 3/10/09 - FINANCE - BILLS 090007 and 090016 table.)

I'm sorry. We're negotiating here. Go ahead, please.

My name is Madeline Shakumba. I represent Northwest Washington Avenue Coalition Group in South Philly. I guess I'm the only one here to speak on behalf of this bill, because I do support it. Why do I support this bill? I think it's a shame -- I'm a senior citizen and I got to pay a full bill. You got these educational institutions, University of Pennsylvania, a billion-dollar endowment and paying -- getting a percent discount. I'm not 19 even getting a discount. And you got all 20 these other institutions getting 21 discounts, and my poor income, there's no 22 discount for me. Why are they getting 23 discounts? Especially HUP. What they 24 need a discount for? You got all these 25 buildings they building down here on 140 3/10/09 - FINANCE - BILLS 090007 and 090016 Walnut Street and Chestnut Street and got all this income from all these buildings they got. What do they need a discount for? That's not counting only them. I can understand why PHA need one, but don't tell me about HUP. Okay? When I run out of money and can't my water bill, I get a shut-off notice. They're not getting one. Why should I get a shut-off notice? What you need to do -- and I agree with Councilwoman Jannie Blackwell, you need a litmus test. You do. These people need -- I don't think they should get a discount, period. Why? What they need to do -- and this is my suggestion -- implement a water management plan. I just came from the third floor in this building using the ladies' room. You got a leaky faucet. You know how much that water is leaking in there, how many million gallons wasted? And nobody even fix that faucet down there. 141 3/10/09 - FINANCE - BILLS 090007 and 090016 No telling how many other faucets you got running around here in this building and other buildings that's leaking, along with bad toilets and everything. That goes also for some of these institutions sitting up here crying about money. If you implemented a water management plan, you might be able to save that discount that you asking for. And if you want to know how to implement it, call me. I'll be glad to show you. Because that's what they need. They need to submit a water management plan and cut off some of these leaky faucets, bad toilets and where they're losing water, because if they stop losing water, they won't need the discount. Also, if we had a bad drought, what would you do? If we had a bad drought, the first thing you implement, you tell people what? Cut down on water. Well, why we got to wait for a drought for people to cut down on use of water? Why can't they cut down on it now? When 142 3/10/09 - FINANCE - BILLS 090007 and 090016 California had a drought, they had a saying: When it's yellow, let it mellow. When it's brown, flush it down. Why do you have to flush the toilet every time you go to the bathroom? That's gallons of water being flushed down there. For what reason? That's a waste of water. Now, I know that might sound funny, but I'm telling you. Okay? Also, I know there are churches in here asking for a discount. I hope you people be around here when I come back here for this tax on my house when they come for this. Are you going to be here for me? Because they going to full value. I want you to tell me you going to show up for me when they go to full value and support me and people like me when we don't have the money to pay our taxes for our real estate. As it is, some of you getting real estate taxes discount too, and that includes the churches. Half of you don't pay no money 143 3/10/09 - FINANCE - BILLS 090007 and 090016 on church property. I ain't getting no discount on nothing. I got to pay full value on everything, because my income is slightly higher than what would get me some discounts. That's why I'm against -- I'm for this bill and against all these discounts people are getting. You had good times. When I have good times with my money, what do I do? I set aside money for bad times. Did you do that? I don't think so.

Because if you had done that, you wouldn't be here sitting here crying about all these discounts you've been getting. You should have saved the money from the discounts for these bad times that we're hitting right now. I know I had to do the same thing. So if I could do that with my budget, why can't you do that with yours? Thank you.

Thank you very much. 144 3/10/09 - FINANCE - BILLS 090007 and 090016 Is there anyone else here to testify on this bill? Mr. Bertocci. Councilwoman Brown has a comment she'd like to make before you testify. Okay. She'll wait until you're finished. Thank you very much.

You had some comments you wanted to make before I testified or after?

Go ahead.

My name is Philip Bertocci. I'm the Supervising Attorney in the Energy Unit at Community Legal Services. I submitted some written testimony to you. I'm not going to read that testimony. I sat and listened to what has been a very interesting afternoon of testimony from various groups in the City, and one has to be appreciative of the effort and the devotion and the commitment that goes 145 3/10/09 - FINANCE - BILLS 090007 and 090016 into providing housing services, spiritual services, educational services, all the things that Philadelphians do on a communal basis in order to make life in Philadelphia truly livable. And I thought to myself, why is it that basically I agree with Councilman DiCicco and -- COUNCILMAN DiCICCO: I was wondering that.

-- Community Legal Services agrees with Councilman DiCicco also. The reason is, we approach this from a little bit different perspective than many of the people that you've heard today. We approach it from the point of view of lawyers representing the very poorest of the citizens of the City of Philadelphia, and we tend to look at things more in a structural way. And when we look at things in a structural way, we ask what would be the fairer system that we could have for the setting of water and sewer rates in the City of 146 3/10/09 - FINANCE - BILLS 090007 and 090016 Philadelphia. And I have just gotten through the third of my rate cases representing -- serving as the public advocate representing residential customers in water rate increases of the Philadelphia Water Department, and I couldn't help but think that if this debate had taken place a year ago and if this bill had been passed, all of CLS's clients, over 100,000, 125,000 low-income people, would this year be paying a bill 13 which would be probably $20 less annually than they are having to pay right now. So that when we look at this situation, I think we have to look at the structure. Now, I recognize that, as the Water Department testified, that if this phasing out of the discounts went into effect immediately, obviously there would be what might be a windfall for the Water Department, although the Water Department has also experienced some disadvantages, some things that they didn't expect and that nobody expected to have happen 147 3/10/09 - FINANCE - BILLS 090007 and 090016 concerning their bonds, which are very important as I know to everybody in City Council and in fact should be important to all Philadelphians. But the point that I wanted to make is that phasing in the end of these discounts makes some sense, because it helps to reconcile obviously the commitments that organizations have made and, at the same time, to recognize a basic principle of fairness. So that what we are looking for -- I mean, when I look at this situation -- and I would refer you to my testimony to about the third -- second page of my testimony where I see people coming into our office, many low-income people. We have 125,000 people in Philadelphia who are customers of the various utilities who have a great deal of difficulty paying their bills. These are the people that many of them are eligible for LIHEAP, for senior citizens. All of these folks have a very difficult 148 3/10/09 - FINANCE - BILLS 090007 and 090016 time paying their bills. That's witnessed by fact that the Water Department turns off 40,000 people a year for non-payment, 40,000 Philadelphians. That's almost one in ten. And that means that really no Philadelphian should be paying a penny more than they have to, than is fair for them, to subsidize anybody for a basic necessity of life. This is not just a situation of talking about sort of taxes where we're kind of doing balancing here, there and elsewhere. What we are doing here when we are asking a low-income person to subsidize even an institution, even a charitable institution, even an institution doing very good things, we're asking them to put at risk the very basic service that they need to maintain their family dignity. What family can be without water service for any period of time and maintain that dignity? And this is the threat that you have when you don't have 149 3/10/09 - FINANCE - BILLS 090007 and 090016 a fair system, when you are subsidizing a basic necessity of life for some other social benefits. So that's the perspective that I come at this from. And I recognize that my goal in the short term is not fair. I mean, one side says, Well, we've been relying on having a budget of a certain time and we're in tough times, and I recognize that many of the churches are in tough times, many of the educational institutions are in tough times. CLS, which is a non-profit, is in tough times, although I don't think we get the water discounts.

Nevertheless, we still have to keep our eye on fairness. We still have to look for the long term. That's what communities do. They keep working for what is right. And what is right is to have the fairer system for a basic necessity of life in the City of Philadelphia. So I would thank you very much for providing me with a very interesting 150 3/10/09 - FINANCE - BILLS 090007 and 090016 afternoon and giving me the opportunity to speak to you about the viewpoint of people that make a living off dealing with utility service and are really focused on the long term as well as the short term, getting something that's fair and that makes Philadelphia as a community go forward with a fair system of water/sewer charges.

Thank you. Councilman Goode.

Thank you, Madam Chair. Mr. Bertocci, did you hear the Water Department testify that this money would go toward debt service?

Yes.

And did you hear them testify also that if this bill 21 was implemented, it would not reduce the rate for any of the other ratepayers?

Yes, I heard that testimony, and, frankly --

So you 151 3/10/09 - FINANCE - BILLS 090007 and 090016 convinced yourself totally otherwise? Even though they stated for the record, did you actually convince yourself that that's actually not what they're going to do?

I think you have to understand the context in which rates are made. Rates are made in the context where the Water Department makes predictions of what their costs are going forward, and what they're allowed to recover is only --

Mr. Bertocci, this is not a philosophical nor is it really that technical of a conversation. We actually asked the Water Department directly, one, what are you going to use the money for, and they said to pay the debt service. Two, if this bill was implemented, would it be used at all to reduce the rate for other ratepayers. They said no. That's what they said. So have you convinced yourself otherwise that somehow that's 152 3/10/09 - FINANCE - BILLS 090007 and 090016 just going to magically happen?

Well, that's taking it -- with all due respect, that's taking a very short-term view of how rates actually work, because if the charge is there for debt service, then when time comes for another rate case, if that $10 million of savings is not used for debt service, then when the next rate case comes up, it's going to be $10 million more. That's all.

Let me ask the second question, then. First of all, it's not $10 million. It's 8.5. And what impact do you actually believe $8.5 million is going to have in rate setting?

Well, it's --

Now you can give me the technical response.

It's $20 a year for -- COUNCILMAN DiCICCO: Point of order, Madam Chair, with due respect to Councilman Goode. Would it be 153 3/10/09 - FINANCE - BILLS 090007 and 090016 appropriate if we can get the Water Department up? Because I think there's different points of view, obviously. I understand where you're going. They may be able to give a little bit more insight into this.

That's fine with me, but I would like Mr. Bertocci to answer the question since he wanted to discuss how rates are set. COUNCILMAN DiCICCO: Okay.

What impact do you believe $8.5 million would have in terms of setting rates in the future?

Well, it's $20 a customer. That's what the impact is.

Twenty dollars per customer?

Twenty dollars on the annual rate, yes.

Per year.

I'm not sure. Can you do the math for me how you get to $20? 154 3/10/09 - FINANCE - BILLS 090007 and 090016

Well, I was doing it with million, but if you were 4 shifting $9 million from 75 -- there's 5 475,000 customers. About 10,000 6 customers are -- not counting seniors -- 7 getting the senior citizen discount -- I 8 mean, get the discount that we're talking 9 about. If you take those 10,000 customers and that $9 million, that's what you're talking about. You're shifting that money to all the other customers, to the 465,000 customers.

So in your estimation, the average would be $20 per year if you average it out?

On average, yes.

On average. So for low-income persons --

Well, I just used the on average. I don't have the ability to do more -- to break it down into groups of customers.

But you came here to advocate for low-income people 155 3/10/09 - FINANCE - BILLS 090007 and 090016 who you say were subsidizing the discounts for non-profits.

That's right. They are.

My question is, how much per year do you think the average low-income person is subsidizing for the non-profit discounts?

Well, on a system average, back of the envelope, it's the $20 that I talked about.

That's $20. That would not be what the average low-income person would be subsidizing.

Remember, we're dealing with a system which is overwhelmingly residential. I think it's about 435,000 customers are residential customers. And the usage level doesn't have a huge range. It has some range. And there the Water Department would have to talk about that. But I think it's justified at least a beginning by using averages and saying, Okay, well, this is 156 3/10/09 - FINANCE - BILLS 090007 and 090016 what it is, back of the envelope. Now, if you want to interrogate the Water Department in more detail on just exactly what it amounts to if they broke it down into levels of customer usage, certainly as a legislator, that's something that you might want to do and --

So you don't actually know --

No, I can't tell you that.

-- how much the average low-income person is providing in terms of --

No, certainly not to the penny.

Thank you. Thank you, Madam Chair.

Thank you very much. It seems to me -- I'm looking at this sheet that the Water Department gave us, and at the end of the day, they 157 3/10/09 - FINANCE - BILLS 090007 and 090016 bill $52,282,888 and the total discount for all of these organizations, $13 million. So, I mean, they're still collecting about $40 million for water. I mean, there's so many issues here that are not -- we don't have information on in terms of the details and the technical aspect of this for me to want to be supportive of this, because I look at all of these small charitable organizations, forget the big ones, because they contribute too, because when I need something, I have to go to Einstein. When I wanted help with the library, Einstein said, I'm going to help you, what do you need? So for me to turn around and say, You got to pay the water bill, but I want you to give me so many thousands of dollars to run a library. It all kind of balances itself out. When you go to the church to get help, my church pays people's water bills sometimes. So it kind of balances the whole situation out in terms of what the 158 3/10/09 - FINANCE - BILLS 090007 and 090016 charities provide to these communities. And I'm not going to pick on Penn because Penn is big, but they do have a big endowment, but Jannie is over there begging every day for something, and some of us are, too. So, I mean, we want to take and we want to give. We want to take and then we say, Give us this, give us that. So I think at the end of the day, the low-income person sounds willing to give the $20 a year. We didn't ask them. They said, We will give $20 a year to help if it's going to help maybe feed people or provide services to people or something to someone who is even -- who is just as poor as I am, but I'm giving something back.

Well, I'm not saying that reasonable people can't differ. The only point I would add is that when you look at rate policies across the state, the PUC wouldn't allow these sorts of discounts. These are 159 3/10/09 - FINANCE - BILLS 090007 and 090016 discounts that have developed historically within the City of Philadelphia.

They do things in a vacuum.

PUC wouldn't even accept the senior citizen discount, except grandfathered for PGW a few years ago. And that is basically the rate-making principal. You still have the authority. I'm not denying you have the authority to do -- as a legislative body, to say, Okay, we think we can do this and we defined it in a certain sort of way and we have a basis for doing it, which has to do with the City of Philadelphia, but that's -- once more, that's why I'm here, to try to say, you know, there's another model that you could look at and there are some other values here that should be considered besides simply the fact that non-profits are saying, It's going to be very difficult for us to adjust. Change 160 3/10/09 - FINANCE - BILLS 090007 and 090016 is always hard. We all know that.

It certainly is, but they always write me every month for money, for contributions. So I know they're suffering. And we also have -- we have some responsibility. We have responsibility too to our Water Department, but I just think -- I'm not sure that this is the way we need to go with this bill. Councilwoman Brown.

Yes, Madam Chair. Given your comments and while I completely and fully understand the spirit and intent of this bill as presented by the sponsor of the bill, Councilman DiCicco, and the supportive remarks of Councilman Jim Kenney, I need to go on record to say I believe we need more information, given the testimony of the hospitals and the School District, who did not speak, but for me most notably, residents of PHA. It's clear to me, given a lot of unanswered questions 161 3/10/09 - FINANCE - BILLS 090007 and 090016 and this document here, which is really an eye opener, plus the additional documents we need to see and review, at this juncture I would like to ask the sponsor to hold the bill in committee so that we can get that information, review it and get the unanswered questions and then move cautiously, and I would repeat the word "cautiously," to a place where fair and equity is in the discussion and arbitrary and unfair is out of the discussion. Thank you, Madam Chair.

Thank you. Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam Chair, and thank you, everyone, for participating in these hearings. I am very reluctantly going to agree to hold this bill, obviously because I don't have the votes. If I had the votes, I would obviously call it up. But I think it's important and I think Mr. Bertocci's comments go to the heart of what caused 162 3/10/09 - FINANCE - BILLS 090007 and 090016 me to do this. Mr. Archie was here earlier today and sent a letter to my office about a year ago wondering why PHA was only afforded a five percent discount when everybody else was getting a 7 percent discount. So as a result of his 8 letter, that initiated me to look into 9 this whole discount program and realized 10 that there was unfairness, there wasn't a 11 balance. 12 The issue on the debt service, 13 that the money will not be used to lower 14 rates, at some point, unless there's some 15 money coming from somewhere that none of 16 us know about, there will be rate 17 increases. So the money, as you 18 explained to Councilman Goode's question, 19 would support the debt service, and as 20 interest rates keep going, that debt 21 service becomes a greater burden for the 22 Water Department, and ultimately the 23 ratepayer is going to have to pick up the 24 tab. 25 So there's no easy solution. 163 3/10/09 - FINANCE - BILLS 090007 and 090016 There's no easy way out of this. I was just looking to spread it out across all of the property owners throughout the City to make it a more equitable distribution or cost to each individual property owner. Again, I wasn't picking on Penn. I just happened to look over and I see David Glancey here, and when I see him, I think of Penn these days. But it's just I didn't think it was a fair thing to do, especially when I mentioned a couple of my comments earlier. You have non-profits. Some of them have the ability to go out and raise money and fund raise. And if the ratepayer believes in a charity or his or her church, there's always a way which they could help supplement for that increase by way of the discount going away. But that's a choice. Right now ratepayers don't have a choice, and that's where I was going. I was trying to give fairness and equity across the board. We're going to pay for this. 164 3/10/09 - FINANCE - BILLS 090007 and 090016 At some point, in another year, maybe sooner, maybe a little bit longer, Philadelphia Water Department is going to come looking for a rate increase because of the debt service, if nothing else, just to support their debt service. So our rates are going to go up some way, shape or form, and that would become a greater increase on the ratepayer, because we're still going to have this 12 percent discount afforded to those 13 non-profits. 14 So thank you again. By the 15 way, by way of background, I come from a 16 non-profit background. I created a 17 couple non-profits. I understand. I 18 deal with non-profits, as all of us do, 19 activity fund grants. We're always 20 trying to find money to supplement them, 21 but, again, for me it was a question of 22 fairness. And some people disagree with 23 that, but that's where I was going with 24 this. 25 Thank you, Madam Chair. 165 3/10/09 - FINANCE - BILLS 090007 and 090016

Thank you very much. Let me just recognize that we have a letter from HMS School for Children with Cerebral Palsy, who states that -- we will enter this into the record in its entirety -- that they voice their opposition to the elimination of the percent discount. 11 I think what we might want to 12 do, under the leadership of Councilman 13 DiCicco, is have a discussion with the 14 Water Department about this whole matter. 15 He introduced the bill. A lot of us 16 right now in the middle of the budget are 17 trying to deal with the budget and 18 certainly haven't had an opportunity to 19 have a full discussion about this 20 internally, and so I think we can get 21 some questions answered from the Water 22 Department about a lot of the issues that 23 have been raised today. 24 I certainly want to thank 25 everybody for coming out this afternoon. 166 3/10/09 - FINANCE - BILLS 090007 and 090016 I certainly appreciate your respect for time. I thought I'd be here until about o'clock given the number of people who 5 wanted to testify, but you were concise 6 and you knew what you were saying and 7 wanted to say and you said it in a timely fashion. What we will do, we will adjourn this committee for this bill 11 until the call of the Chair. Thank you very much. (Applause.) 167 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on March 10, 2009, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)