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.
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.
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.
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.
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.
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.
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?
Councilwoman Blondell Reynolds Brown. Do you have a question?
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.)
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?
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, Madam Chair. Mr. Bertocci, did you hear the Water Department testify that this money would go toward debt service?
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?
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?
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?
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?
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.
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 --
-- how much the average low-income person is providing in terms of --
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.
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.)