Committee Hearing, February 15, 2002

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COMMITTEE OF THE WHOLE - - - Friday, 2/15/02 10:30 a.m. Room 400, City Hall Philadelphia, PA - - - BILL 020036 - Authorizing and approving the execution and delivery of a service agreement between the City of Philadelphia and the Redevelopment Authority relating to a comprehensive Neighborhood Transformation Program. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN JANNIE L. BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK J. DICICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILMAN W. THACHER LONGSTRETH COUNCILMAN RICHARD T. MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN BRIAN J. O'NEILL COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2/15/02 COMMITTEE OF THE WHOLE INDEX WITNESS Joyce Wilkerson, Mayor's Chief of Staff........ Patricia Smith, Director, NTI.................. 17 Herbert Wetzel, Executive Director, RDA........ 43 G. Whitman Temple U. Center for Public Policy 85 N. Lichtash, Women's Community Revitalization 92 J. Robinson, Real-Estate Broker................ 96 R. Sauer, Philadelphia Association of CDCs..... 106 Joe Wingert, Partnership CDC................... 110 Ann Ewing, East Mt. Airy Neighbors............. 112 Ed Schwartz, Inst. for Study of Civic Values 118 Jeff Brown, AFSCME Local 1971.................. 130 Nancy Salandra, Liberty Resources.............. 156 Omjasissa Kentu, Grassroots Political Network 161 Kermit Newkirk, Philadelphia Interfaith Action 166 James Shrode, Disabled in Action............... 169 Ruth Birchett, Heritage CDC.................... 185 Maxine Griffith, City Planning Commission...... 190 Tully Speaker, Logan Square Neighborhood Assoc. 192 Sharmain Turner-Matlack, GPUAC................. 195 James Connor, Beneficial Savings Bank.......... 203 Galen Tyler, Kensington Welfare Rights Union... 207 - - - 3 2/15/02 - WHOLE - BILL 020036

Good morning, everyone. This is a public hearing of the Committee of the Whole regarding Bill No. 020036. I would ask Mr. McPherson to please read the title of the ordinance.

Bill No. 020036, an ordinance amending Bill No. 010694, an ordinance 9 authorizing and approving the execution and delivery of a service agreement between the City of Philadelphia and the Redevelopment Authority relating to a comprehensive Neighborhood Transformation Program for revitalization, renewal, redevelopment, and transformation of blighted areas within the City of Philadelphia and other activities to promote the health, safety, and welfare of the residents of the City of Philadelphia.

I believe our first witness is Joyce Wilkerson, Chief of Staff, the Office of the Mayor. (Witnesses come forward.)

Good morning.

Good morning, Madam President and members of City Council. My name is 4 2/15/02 - WHOLE - BILL 020036 Joyce Wilkerson, the Mayor's Chief of Staff. With me today is Pat Smith. Miss Smith is the Director of the Neighborhood Transformation Initiative. I'm presenting the Administration's testimony in support of Bill 020036, amending Ordinance No. 010694, the NTI legislation signed into the law by the Mayor last month. These amendments will result in NTI legislation that is different in many ways from the bill transmitted by the Administration in April of last year and also the bill passed by City Council in December. It will reflect the negotiations with City Council's own technical staff in hours of meetings with Councilmembers one-on-one and in groups. I believe that with the passage of the proposed amendments, we will have legislation superior to the Administration's proposed bill and the bill enacted last month. The proposed amendments to Ordinance No. 21 010694 will establish a healthy balance between legislative oversight and executive action, they eliminate the overly-burdensome aspects of the ordinance, while maintaining and, in some cases, expanding the authority of Councilmembers to effect 5 2/15/02 - WHOLE - BILL 020036 NTI decisions in their districts. The amendments also remove those aspects of the enacted legislation that were illegal or prevented the sale of NTI bonds. There are two types of oversight engagement of program design budgeting and planning and verification of implementation. The amended bill addresses both of these oversight mechanisms while in no way reducing Council's current powers with respect to development activities. As a brief review, the NTI Transformation Initiative is a revitalization strategy for Philadelphia's neighborhoods. It strives to reduce decades of decay and inattention through four general activities: blight elimination, including demolition and stabilization of vacant buildings and the cleaning and greening of vacant lots; blight prevention through code enforcement and anti-predatory lending activities; proactive land assembly; and housing investment in neighborhood preservation activities. The proposed amendments authorize the 6 2/15/02 - WHOLE - BILL 020036 approval of a service agreement that includes the NTI Program framework. This framework articulates the parameters for the expenditure of NTI bond proceeds, including City Council's oversight role. Because it's an exhibit to the service agreement, this NTI program frame work can only be changed through City Council passage of an ordinance. The binding NTI Program framework mandates an annual process to gain City Council approval of a detailed program statements and budget. Copies of the budget template dealing with the type of information the Administration will be required to provide City Council are attached to the testimony. These documents will govern and control the expenditure of NTI bond proceeds. The documents also compel the Administration to describe all other community-development expenditures, even those not funded with NTI bond proceeds; therefore, under the proposed amendments, City Council would retain important oversight functions over NTI's general strategic thrust and the specific appropriation of funds supporting NTI activities. In addition, the amended bill goes even further: It also provides City Council with oversight role 7 2/15/02 - WHOLE - BILL 020036 in each and every NTI activity. FIRST: BLIGHT ELIMINATION NTI will eliminate the City's backlog of dangerous buildings by demolishing approximately 14,000 vacant buildings and by stabilizing between 1,000 and 2,500 buildings.

Each and every District Councilperson will have the opportunity to review, comment, and otherwise participate in: The selection of properties for demolition and stabilization work; the Project Procedures Manual; pre-bid inspection tours and conferences with contractors and conferences with contractors and vendors; and any non-emergency relocation plans. " The only caveat to this would be those emergency situations where health and welfare are at risk. Much of the City Council engagement will 8 2/15/02 - WHOLE - BILL 020036 be supported with information technology such as the GIS decision support model developed by the project manager. The Administration recognizes that's demolition and encapsization program exceeded the City's management capacity and, therefore, hired Hill International as a program manager. Essentially a technical consultant to the City, Hill International is charged with: Monitoring field work and providing monthly reports; working with City departments and City Council to prepare program procedures; and managing program delivery. The City will remain responsible for all program planning prioritization, and decision-making, and for the issuance and awarding for all bid packages and contracts. NTI has also initiated the unprecedented cleaning of 30,000 vacant lots. It is now engaged in a planning process to develop long-term cleaning, maintenance, and greening strategies. Councilmembers will have the opportunity to review and comment and participate in the development of strategic plans for greening vacant land and the interim treatment of vacant properties after demolition. 9 2/15/02 - WHOLE - BILL 020036 SECOND: BLIGHT PREVENTION NTI will strengthen code-enforcement activities and foster a comprehensive anti- predatory lending effort. Through the City's General Operating Budget and the Community Development Block Grant, City Council currently reviews, comments, and approves funding for the departments and entities that will implement these strategies. The amended bill in no way diminishes City Council's role in oversight in these areas. THIRD: LAND ASSEMBLY The aggregation of vacant land will proceed almost exclusively through the use of the Redevelopment Authority's eminent domain power. These powers are specified in the Commonwealth's Urban Redevelopment Law, and that law mandates City Council's role. Accordingly, City Council approval is required to use RDA's eminent domain powers to: Acquire properties; propose a reuse; or sell, lease or in any other away transfer properties. These amendments completely maintain City Council's role of oversight in these activities. FOURTH: HOUSING INVESTMENT, NEIGHBORHOOD PRESERVATION The Administration is committed to working 10 2/15/02 - WHOLE - BILL 020036 with Councilpersons in revitalizing Philadelphia communities. On an annual basis, the Administration will request from every Councilmember a list of the potential redevelopment and housing preservation projects within their district. These projects must be consistent with NTI's organizing principles, and the Administration will meet with every Councilmember to discuss the project's development strategy and to identify the resources such as markets studies or requests for developer qualifications necessary to advance the project. Again, at the request of Councilmembers, the amendments include a provision that will compel the Administration to provide funding for a development consultant for City Council, selected by a majority of Councilmembers, to enable Councilmembers to play a more active role in the development discussions. PROGRESS REPORTS The Council's oversight mechanisms I have discussed involve engagement before activities occur. Several Councilmembers expressed their concerns that City Council also have an opportunity 11 2/15/02 - WHOLE - BILL 020036 to verify the implementation of NTI activities after City Council approves the annual program statement and budget.

I am pleased to reassure Councilmembers that the amended bill provides such verification. With respect to blight-elimination activities, the Administration will maintain an NTI Project Administration Website to which Councilmembers will have access. The NTI project Website will regularly post updated reports on: demolition, stabilization, and encapsulation activities; demolition bid packages and a list of dangerous buildings;

Point of order. Is there a written statement of this?

I believe it was delivered to all of the offices.

I have an extra. the Master Schedule and Master Budget; relocation activities; Equal Employment Opportunity Plan compliance and monitoring; Citywide vacant lot cleanup schedule; 12 2/15/02 - WHOLE - BILL 020036 and District-specific calendars of community meetings on NTI activities. The NTI Project Website will also post: Field surveys and social-service assessments; the Project Procedures Manual; the Program Manager's Phase and Phase findings and recommendations; and copies of brochures, pamphlets, and other materials for community meetings. These reporting requirements are quite extensive, and, in hard-copy format, would literally consume hundreds of pages of information. With respect to blight prevention activities, the Administration will continue its current practice of measuring department activities through the Budget Office quarterly reporting process, as required by the ordinance. In addition, the Administration commits to: 1. Provide each and every Councilperson with a written monthly status report on the land assembly, redevelopment, and housing preservation activities in his or her district which are funded with NTI bond proceeds; and 2. Meet quarterly with each Councilperson 13 2/15/02 - WHOLE - BILL 020036 to discuss any problems that are delaying land assembly, redevelopment, and housing preservation activities with his or her district, and to develop economically-feasible solutions. In extreme situation where a project is defunded, the Administration will provide the District Councilperson with a detailed written explanation and will consult with District Councilpersons in reprogramming the funds to support other projects within the district. MISCELLANEOUS PROVISIONS: I want to comment on two other changes the amendments would make. Bill No. 010694 would have conditioned the Administration's access to bond proceeds on Council's approval by resolution of an economic-opportunity plan. In April 2001, the Administration transmitted to City Council a comprehensive Economic Opportunity Plan; the amendments would result in its immediate adoption. Bill 010694 also condition access to bond proceeds on Council's approval by resolution of a house reorganization plan. This requirement is dropped; instead, the Administration commits to consult with Councilmembers as it proceeds with 14 2/15/02 - WHOLE - BILL 020036 housing reorganization plans. Finally, the amendments have deleted the "non-severability clause." CONCLUSION: As amended, Bill 010694 would ensure that City Council can fulfill its oversight responsibilities. The Administration is committed to engage Councilmembers at the planning stage of NTI activities and to engage Council in verification of NTI's implementation. Through the mechanisms I have described, the amended bill would balance Council's oversight role with the Administration's need to avoid yet further delays. Passage of the amendments to Bill 020036 will allow us to begin the much-needed work of transforming our neighborhoods. - - -

Madam President, I also have -- would like to request that this committee consider two amendments. Apparently, the Economic Opportunity Plan was not actually attached, or was not a part of the Clerk's record, and wanted to submit for Council's consideration an amendment that would actually attach the Economic Opportunity 15 2/15/02 - WHOLE - BILL 020036 Plan. And, secondly, I believe there are amendments that have been proposed that would add a City Council program evaluation consultant and also provide that no development project or geographically targeted housing and neighborhood preservation program shall be funded with bond proceeds without the prior approval in writing of the District Councilperson in whose district such project or program will be undertaken.

Do we have a copy of the amendments that you just read?

I have. (Amendments distributed.)

Madam President, I'd like to pull back the amendment that would -- that does not address the addition of the Economic Opportunity Plan as an exhibit. I was mistaken in submitting that.

I'm sorry?

I'd like to withdraw -- there's an amendment that would amend Section VII (a) and Section VII(d) to provide for an evaluation consultant and also City Council approval of the 16 2/15/02 - WHOLE - BILL 020036 District-specific housing development. I'd like to withdraw that request for consideration.

Thank you. Are there questions from members of the committee? I just have one: When will acquisition monies be made available?

My name is Patricia Smith, and I'm Director of the Neighborhood Transformation Initiative. Attached to the program framework is a budget where we estimate using approximately, I believe -- if we're able to get to the markets in time, we would allocate and seek about $2 million for acquisition. In addition, we have begun to look at -- so I would say we could probably start budgeting the beginning of the fiscal year July 1 -- I mean, actually, July of this year, to begin to spend 21 dollars. 22

And when do you 23 anticipate going to the market? 24

Based on my conversations with 25 the senior underwriters for the bond issue, we 17 1 2/15/02 - WHOLE - BILL 020036 anticipate it can take about six to eight weeks to develop what you call the "offering statement," so about six to eight weeks after passage of the legislation by Council.

All right, thank you. Are there any questions from members of the committee? The Chair recognizes Councilman Cohen.

Thank you, Madam President. First, what specifically will be the role of the Redevelopment Authority in the program? Will they have any substantive input, or will decisions be made by the Neighborhood Transformation --

I'm sorry, I didn't hear the last part of your question.

Will the Redevelopment Authority have any impact on the substantive content of the program, or are they merely the financing agent?

The Redevelopment Authority will be the issuer of the bonds. The 18 2/15/02 - WHOLE - BILL 020036 Redevelopment Authority also will perform its traditional role in connection with land acquisition and disposition, and it currently is involved in underwriting development projects. So, you know, the only new role for the Redevelopment Authority would be its role as issuer. I mean, right now, the Redevelopment Authority undertakes, you know, creation of urban renewal areas. The Redevelopment Authority does the actual underwriting when a development is financed by -- with CDBG bond proceeds. The Redevelopment Authority is the entity that decides, you know, that evaluates the transaction and advises and actually commits dollars on behalf of the City.

Well --

So that's not a change at all.

Well, is it that the Redevelopment Authority technically will have the last word in determining the nature of the program where the project is done?

No. The way it's been structured is that it's all City-driven, and the 19 2/15/02 - WHOLE - BILL 020036 actual activity that is going to be undertaken is proposed initially by the Administration, submitted to City Council for approval by resolution. And if you look at the exhibits to my testimony, the budget templates, when we come to City Council, there will be a detailed statements of exactly what the Administration proposes to undertake with the bond proceeds. And so we'll be identifying for that year exactly how many properties are intended for demolition, how many properties by district, the estimated cost of those demolitions. The same level of detail will be provided for encapsulation activities. If there's a development that's proposed for actual development, that will be reflected in the budget that City Council will approve. Then the bond proceeds can only be spent in a way that's consistent with a City Council-approved budget. So we won't be able to draw -- the Redevelopment Authority won't be able to draw down bond proceeds unless the expenditure the proposed proceeds unless the expenditure, the proposed expenditure, complies with a City Council-approved budget. 20 2/15/02 - WHOLE - BILL 020036

What did you mean by -- in your answer you said, "And if there is a development project proposed, it will contain the details of it"? A development project different from cleaning lots?

Mm-hmm.

Demolishing buildings?

Right. For example, if it's proposed that funds be expended to acquire a lot or perhaps commit some level of dollars to a preservation strategy, for example, you know, not just encapsulation but encapsulation and perhaps some funds made available for homeowner rehabilitation, that would all be reflected in the annual budget that's brought to City Council. So if you look at the templates, the Administration would be required to come to City Council, describe the program, the amount of dollars that are proposed for expenditure, where the program will be implemented. So, for example, if it's a -- it might be a program that makes sense for the 6th Councilmatic District but is not necessarily, you know, a good strategy for a another neighborhood, we would say 21 2/15/02 - WHOLE - BILL 020036 at the time we come to City Council for approval of program budget, the overall NTI program budget, for the year exactly where those funds would be expended. So, you know, what we heard Council say from the beginning is, We want to know how the money's going to be spent; you know, we just don't want there to be $250 million out there. We want to understand exactly where the dollars are going to be invested. And so we will come back to City Council on an annual basis, say, This is how it's proposed that the monies be spent. The expenditure of dollars will be con --

What will be the power of City Council at that point?

City Council will either approve or modify or reject the budget. I mean, we can't -- we won't be able to access those bond proceeds. The only thing exception is for emergency demolitions. But other than that, the Administration will not have the authority to access bond proceeds unless City Council has signed off on the program statement and the budget. 22 2/15/02 - WHOLE - BILL 020036 The -- I think, you know, that's the answer.

What is going to be the role of these companies? How many companies will be hired as contractors who have some kind of a supervisory or overview role or...

The Administration has a program manager that was retained, and that's Hill International that you hear about. Hill International is helping the City manage all of the pieces that are related to the demolition and encapsulization [sic] work. It involves -- in order for the City to execute what we think is a reasonable demolition and encapsulation strategy, we have to have good surveys of what's going on in neighborhoods, we have to have a mechanism for letting people in neighborhoods know what it is that's being proposed, we have to make sure that we get bid packages rolling through on a regular basis, we have to make sure that adequate provisions are made for a -- for disposal of the demolition debris. We have a very aggressive Economic Opportunity Plan that creates opportunities for 23 2/15/02 - WHOLE - BILL 020036 small businesses; we have to make sure that we're sizing development in a way that provides those opportunities. We have to also, at the same time we're doing demolition and encapsulization [sic], be thinking of what's going to happen next. This is not simply a demolition program. It's important to know what happens next in a neighborhood, and so the people on the housing-development side have to be coordinated in. There is no infrastructure within government that would permit that kind of coordinated decision-making. What Hill International bring --

I always thought just at that point -- if I may, I always thought that was the main function of the Managing Director's Office, that that's the reason that the Managing Director is the supervisor of basic agencies, then we have people that work with the independent authorities.

I think that, to some extent, is what's set out in the Charter, although though not completely because the Charter never anticipated an Office of Housing, for example. 24 2/15/02 - WHOLE - BILL 020036 What we've learned inside the Administration is that even when that's the vision, there's not the apparatus for actually accomplishing the integration of all of that work. We actually have no trained project managers within government who understand how to coordinate all of these pieces, set out critical paths so we know what has to happen first, what has to happen next, to make sure that the steps that are required, for example, if we want to do a demolition, you know, has everything been liened, are the people out of the properties, you know, to make sure that all of those steps happen in an orderly way. We don't have the capacity within government right now to accomplish that, and that's why we have identified and obtained the services of a program manager so that we can undertake the work in a coordinated way. Our goal is to transfer the expertise to City government. We don't want to have to always be relying on outside program managers; we don't have that capacity right now in government. And so part of -- a part of what you have happening is people beginning to understand what 25 2/15/02 - WHOLE - BILL 020036 program management is -- project management is also about. There's information technology that's being used so that we have -- you know, there are tools to enable to us better track what it is that we're doing, and folk inside government are learning about all of that. We don't have those skills now and so the Administration --

Is the project manager an individual or is it...

No. The program manager -- the prime contractor is Hill International that has --

What's the name again?

Hill International

Hill, H-I-L-L?

Yes, International. At the previous hearing, we provided information on Hill and who all the subconsultants are, but Hill International is the prime contractor that is responsible for coordinating the whole project. Hill has --

And the information you supplied, did that indicate a history of managing 2/15/02 - WHOLE - BILL 020036 these kinds of projects?

Yes, yes.

You mean, there have been other blight programs before that which they've managed successfully?

No. This initiative is the first kind of its kind in the country.

That was my understanding.

Philadelphia has the dubious distinction of having more abandoned and dangerous properties per capita than any other city in the country. So nobody else has done exactly this. Hill has a long record of managing very complicated projects of all kinds, and so Hill, I think, is a manager out at the Airport, Hill managed the Convention Center. Those projects are not like this one, but they all involve the basic project-management expertise, integrating diverse components into one -- into one well-coordinated undertaking. I mean, I think that's part of the basic, you know -- 27 2/15/02 - WHOLE - BILL 020036

Where is Hill located?

Hill has headquarters here in Philadelphia and also -- they have an office in Philadelphia and their main headquarters is in New Jersey, in southern New Jersey.

And have they managed projects in this area?

Yes. They've managed both public projects and private projects within this region and nationally and, in fact, internationally. They --

And is it an ongoing company that exists?

They've been in existence, I believe, for more than years. I -- one of the 17 top industry magazines ranked them among the top 18 ten, I believe, program project managers in the 19 country. 20 They were selected by a competitive RFP 21 process last spring. 22

Does it have any local 23 affiliates? Is there going to be some local 24 corporation that's formed? 25

Yeah. What we can do is 28 2/15/02 - WHOLE - BILL 020036 resubmit, and we want to make sure that all of the testimony and information that we submitted in December is incorporated as part of this record, but I'm happy to resubmit the breakout of the table of organization for this project and then the qualifications of the subconsultants that work at Hill.

Any there any other companies in addition to Hill that are going to be a part of the --

Oh, yes, and many of them are locally based. For example, Gannick Flemming (ph) is doing things like the MIS/IT work. A group by the name of Quick is looking at the -- how do we effect -- implement the minority and women participation and training programs. The other, ACG Associates, is working with us in coordinating the community strategy, and I have met with a number of the Councilpeople around community engagement, community information, community outreach. Hail is a disabled community advocate, and Vision Consultant is responsible for planning and scheduling. 29 2/15/02 - WHOLE - BILL 020036 Powell Harfsted (ph) for the environmental and geotechnical components. We have not talked a lot about things like identifying appropriate landfills to dispose of construction demolition debris. One of the sad things is that as a result of the September 11the incident, we are going to be really impacted because the demolition and the debris coming from New York City has impacted landfills throughout this region. This group has begun with G&C Environmental Services, a minority firm. They have begun to work with the State Department of Environmental Protection to come up with a game plan about disposal of demolition debris as we move forward. And then there's architectural engineering support. This will be particularly important where we're looking at stabilization work for buildings, what we need to do where we're not going to demolish. And as I said, we'll make copies and provide this information to all of the Councilpeople again. 30 2/15/02 - WHOLE - BILL 020036

The other large area of opportunities are all the demolition packages. Hill will not -- and the group Pat just identified will not be actually doing any of the demolition. And so we project that -- demolition or encapsulation. And so for the demolition, on a regular basis, there will be bid packages that will be advertised by the City's Procurement Department. We're trying to size those bid packages so that there are opportunities, you know, for community businesses. You know, so there will be a huge number of contracting opportunities for businesses to actually carry out the demolition. As the rehabilitation moves forward, you know, there will be opportunities in neighborhoods for organizations to engage in encapsulation or rehabilitation of properties. So we'll be, you know, looking to have active involvement of a lot of parties. I think in launching an initiative of this size, one of the things that is important is bringing other developers and parties to the table. The City, over the years, has begun dealing with a 31 2/15/02 - WHOLE - BILL 020036 smaller and smaller cadre of developers, and one of the reasons it was really important to the Administration to have a process that had certainty and transparency to it is because we need to have more active interests among the development community in Philadelphia's neighborhoods if this is going to be successful.

How much of the bond proceeds are going to be spent on management of the project by non-City personnel? Is there any calculation of the total cost of these various project managers?

What we did was to break down the program management component into three phases. The first phase -- they're going to have to get me a number. The first two phases is under contract, and we're negotiating the third phase. If you look at the industry, you usually think, you know, the costs can range, and sometimes there's a pro rata cost ranging from to percent, I think, is the historic number with program management costs on complex projects usually cost. I'm not in a position to answer on Phase 32 2/15/02 - WHOLE - BILL 020036 3; we still have to size of scope of work of Phase 3, but I can get to you the amount, which I'm sure somebody will hand to me in a second for the first two phases. (One of Ms. Smith's colleagues hands her a document.)

Thank you. So it's $720,000 for the first two phases, which was the planning project management, and then the oversight and implementation of two prototype projects. What we decided -- again, we want to emphasize, since we have never undertaken something of this scale and size, one of the things that we thought was very important is that we test our assumptions. It's one thing to put up on a chart and have computer-generated, you know, schedules and budgets and all of the other, but we thought before we took it to scale, we wanted to test out our operating assumptions in the field, using different sized bid packages so that we know we're allocating the correct amount of time for field surveys and things like that. So we also built into the 33 2/15/02 - WHOLE - BILL 020036 process what we call "a prototype phase."

But is there any dollar figure in the planning that you've arrived at for management expenses? What of the bonds issue -- how much of the bond issue is going to go to the management of whatever takes place under the program?

What I will do is that we'll get back to you. Once we have finalized the phase -- I would just been guessing at this point. Other than the $720,000, once we finalize the scope, we'll --

(Inaudible, off-mic.)

No. I think one of the things -- this is not a program that supports ongoing operating expenses within government. Those will be funded out of the City's operating budget. The --

As part of the blight program?

Well, some of the work. I mean, Some of what we're talking about is simply government doing business differently. It's not new; it's just doing it differently. 34 2/15/02 - WHOLE - BILL 020036 So, for example, we already have people in L&I who are engaged in demolition in the City. They will continue to be engaged in demolition activities in the City. They'll be coordinating their work with the other City departments in order to accomplish what it is we're talking about. So their work currently is funded in large part out of the City's General Fund; it's funded, you know, to some extent out of the CDBG. Those dollars will continue to be dollars supporting demolition activity, you know. So moving forward, demolition will continue to be supported out of the City's operating budget. It will not be -- the staffing of that in large part won't be funded out of the bond proceeds. The -- some portion of the project manager's work might be, but not the everyday work of government; that will not be funded out of bond proceeds.

Who's going to make that line of separation?

Well, you know, in part, we'll be creating budgets and we'll be coming to you every year with a budget that will reflect how 35 2/15/02 - WHOLE - BILL 020036 we propose to spend bond proceeds, so that, you know, I think it's fair to say Council will not, you know, turn around after five years and find out that we've, you know, put millions and millions of dollars into everyday governmental overhead, dollars that everybody anticipates will be spent in dealing with conditions in our neighborhoods. And so, you know, we'll be coming to City Council annually for authorization of a budget, and you're not going to see a lot of soft costs in it.

Well, I just think it important that in budgets presented, we're told what portion of the budget comes from bond issues and what portion of the budget comes from operating funds generally.

Mm-hmm. That's something that Council, you know, in the conversations that have happened over the course of the last couple of months, Council has indicated that it wants to see a picture of all dollars being expended. The budget detail that is attached to my testimony talks about Council approval of NTI bond proceeds, but the Administration's commitment is to paint as complete a picture as possible, so we'll 36 2/15/02 - WHOLE - BILL 020036 be coming with descriptions of all the other dollars that will be committed to neighborhood transformation-type activities. For example, you know, the CDBG budget will be presented in an integrated picture. If there are going to be City capital dollars that are also a part of the picture, those dollars will be reflected in the comprehensive budget. Although Council's approval is -- in this level of detail, is limited to the bond proceeds.

It started as a Logan sinking homes situation which now has expanded into a number of other communities almost throughout the City. Does the blight program intend to deal with the problem of the sinking homes? which seems to be a problem related to the existence of underground bricks, you know, in the Philadelphia area and maybe the improper building a hundred years ago, when homes were constructed. That seems to me to be a very threatening situation because new areas seem to continue to develop there. Is that part of the blight program?

What we don't anticipate is using NTI bond proceeds to buy people out in 37 2/15/02 - WHOLE - BILL 020036 situations like that; that is not a part of the program. I think that the way we will -- we will begin addressing it because when we go into neighborhoods and start talking about what it takes to stabilize a neighborhood, one of the conditions we'll have to grapple with and plan around are the subsidence conditions, and you're right, this is a problem that is endemic to many neighborhoods in Philadelphia. You know, what we've learned over the last two years is it's a big problem for cities up and down the eastern seaboard. And, you know, NTI is not the only answer to conditions in our neighborhoods. We have Joe Perillo and other people in government working on a whole host of different strategies. We have had some conversations about perhaps a subsidence insurance program. We're not there yet with it, but we think that this is one of those issues that is sufficiently series not only for us but for other cities, that there's going to have to be a comprehensive strategy identified. Another piece of NTI, though, will perhaps bear on it. We have also learned that although people 38 2/15/02 - WHOLE - BILL 020036 may be living in homes that are built on inadequate fill, that fill doesn't have to become a problem. If property owners have proper gutters, drain water away from their properties in an appropriate way, even though the house is built on inadequate fill, it doesn't necessarily have to erode. And so there's, you know, with nominal dollars invested in, you know, drainage, you can probably forestall some of these problems. And so I think you're going to hear more and more talk about doing education around the issues. And also, you know, perhaps, you know, I mean, one of the strategies that could be proposed where you have subsidence as a program that would work with families, or give loans or perhaps grants to families to deal with drainage problems around their houses. But what we envision -- you know, NTI would permit all of that. If you look at the framework that talks about stabilizing neighborhoods, that's an activity that clearly would fall within the framework. What Council has asked is that on an annual basis, we develop a detailed program that is 39 2/15/02 - WHOLE - BILL 020036 consistent with the framework that would explain how we intend to tackle those specific issues. And so I think, you know, we'll be going around. Our commitment is to meet with every Councilmember, develop a real understanding of what's going on in neighborhoods. And so if, you know, in Councilman Mariano's district, you know, where Feltonville is, you know, subsidence is a huge issue, so we sit down and talk about that, you know, and perhaps put together a program that is perhaps Feltonville- specific, that would work with homeowners on drainage issues or the other challenges. Not all of it's going to be bond-funded. You know, Councilwoman Krajewski has her Clip Program that relies heavily on code enforcement; you know, that doesn't involve NTI bond proceeds. But as we talk about what the strategy is for some of those neighborhoods, you know, it will involve some NTI money, but it also involves making much better targeted use of other City resources. And so we would, you know, on an annual basis, we'll be coming, describing programs. Some of them will target subsidence programs' needs 40 2/15/02 - WHOLE - BILL 020036 where it's appropriate, but it may not be citywide.

Thank you, Madam President. Thank you for your patience and not cutting me off before.

That's fine. Can you tell just tell us, what is the criteria for encapsulation and stabilization of a property and how will you be streamlining the acquisition and disposition process?

I'll ask Mr. Wetzel to the table to talk about acquisition and disposition. With respect to encapsulation in NTI framework, which is appended to the pink copy of the bill of our amendment on Page... Let's see, beginning on , we set out the stabilization and encapsulation priorities, and what we talk about is in selecting structures for stabilization and encapsulation, we'll give priority to buildings that are residential and mixed use or commercial properties of four stories or less located on a block with a low vacancy rate. The intention of encapsulation and stabilization, the objective here is to folks on where we're beginning to see, unfortunately, in 41 2/15/02 - WHOLE - BILL 020036 some of our neighborhoods, one or two vacant properties popping up, and we know that the longer that property -- if water begins to penetrate, and the longer that property hangs around, it increases the likelihood over the time that it becomes a dangerous building and we need to demolish. So the objective of this is to really target these resources where, in neighborhoods and communities, we're beginning to see, you know, a low level of vacancy cropping up, enabling us to stabilize the building as we proceed to acquire it and then cause the rehabilitation of that building through issuing an RFP.

Can you tell us how many properties that you plan to encapsulate in the first --

We've budgeted over five years sufficient money to encapsulate or stabilize 2500 properties. We also are putting in place vehicles that gives us the capacity to acquire and rehab. We may not in the first five years be able to acquire and rehab all 2500, but we know we can do approximately a thousand, and that's what we're budgeting at. 42 2/15/02 - WHOLE - BILL 020036 And that's in the five-year budget, which is also a part of the program statement in the back. That's a projected estimated budget. And as we said, each year, with the annual program budget and statement, we'll come back with the specific number of properties to be stabilized by Council District and how that relates to the vacancy rate in that Council District.

Okay, Mr. Wetzel.

Good morning, Council President.

Good morning.

My name is Herbert Wetzel, and I'm Executive Director of the Redevelopment Authority of the City of Philadelphia. With regards to acquisition, let me start out by saying that the City essentially uses five ways to acquire properties: Through urban renewal takings; through Act 94, what's called "spot condemnation"; through sheriff's sale; through donor-taker and the gift property programs. The first thing that strikes me, and has always struck me about this particular problem, is 43 2/15/02 - WHOLE - BILL 020036 that we've had a policy for at least years that we would only acquire a property if there was a party interested in it, so that when people knocked on our door, we didn't even own it for the most part. The truth is, if own it, we generally are able to dispose of it in 90 days or less. It is the year or more that it takes to acquire it that has been sort of the public perception problem because when the person asked for it, in many cases, we didn't own it. So one of the things we want to do is change the policy, which has been only to acquire that for which somebody has asked and aggressively go out and assemble land and put it in a land bank. The second part of that is, is that land is owned by more than one public entity, and that is the City's Public Property owns land and buildings, the Redevelopment Authority owns lands and buildings, PHA owns land and buildings, and PHDC owns land and buildings. In some cases, when developers have come to do a development, they've had to go through all four different entities to assemble the land. So conceptionally what we're talking about 44 2/15/02 - WHOLE - BILL 020036 is that Public Property, the Redevelopment Authority, PHDC, and PHA put all of their surplus property in the land bank so it's all in one ownership, so you don't have four different entities to go to on a block that may own land on a block; it will be one entity that owns it. The next element of that is, we've brought in a consultant who is documenting the existing systems step by step, what goes on in each of the those processes -- from Act 94, to the urban renewal takings, to the sheriff's sale. And that's a twofold process: One is to be able to build the appropriation information technology system so that we will have a database management system for tracking the acquisition and disposition process. I think I mentioned at the last hearing that all of those procedures, whether sheriff's sale or urban renewal, right now are 98 percent and only 2 percent automated, and we want to flip that to make that 98 percent automated and only 2 percent annual. That piece of it is -- there's a second piece of that, and that is uncovering processes that may not be required by law but somebody 45 2/15/02 - WHOLE - BILL 020036 decided at some point in history, We need to do these three steps. And they may not own be required by law and they may not even be necessary so that we could reduce the amount of time by getting rid of unnecessary steps in the process. And the last element, that is seeking reform the State in terms of changes to the urban renewal law and the Act 94 law. And we have submitted to the House Urban Affairs Committee legislation that would fundamentally improve the Act 94 process significantly and tweak the urban renewal. The urban renewal process is fairly well established and can work well. The Act 94 process has some features in it regarding the requirement of L&I to certify a property as blighted, either a vacant lot or property. And what can happen in that process is, someone can pull a building permit or go out and clean up the lot, and suddenly it's not blighted anymore, and we can't proceed to take it as a result of the fact that it's not blighted. We have proposed two items in changing the law.

One is that if the vacant land as a demolition lien on it, it is blighted, and we can 46 2/15/02 - WHOLE - BILL 020036 proceed to take it, so you wouldn't need L&I to certify it as blighted, and the (indiscernible) itself would create the blight. And the other is if that if the real-estate taxes and other municipal liens exceed the fair market value of the property by 150 percent, then it is a blighted property under the Act, and we can proceed to take it. Those two changes alone would probably take two months out of the acquisition process, and it would eliminate -- the only way the property who owns the property could eliminate our taking would be to come in and pay in full the municipal liens or pay in full the demolition lien. And in many cases, you have a $10,000 demolition lien on a lot that's worth $1,000; they're not going to come in and pay 'em, and we're going to be able to take that property. So those are the basic elements that we're working on to improve the system.

When do you anticipate that the State legislature would be considering this? Do you have any indication?

Yes. I spoke to the director 47 2/15/02 - WHOLE - BILL 020036 of the Urban Affairs Committee just this week; he called to ask if we had any modifications that we wanted to make to it, and he told me that they're actively working on it right now. I mean, our objective would be to have it done this spring.

With the sheriff's sales, how long are we waiting before -- because I know that in the past, I have requested that properties be put up for sheriff's sale, and we literally wait years and years, and I know the Revenue Commissioner has said that more often than not, it costs us more money in paperwork than the property is worth.

Mm-hmm

But I think that's being short-sighted too.

I agree. And I think what would be very valuable, though, is that if we can get this change in Act 94 legislation, we would rely much less on sheriff's sales as a process and use this Act 94 legislation to aggressively go after these properties. I mean, there are just inherent issues 48 2/15/02 - WHOLE - BILL 020036 with the sheriff's sale program, because it was intended to be a revenue-collection program, not a land-assembly program. And so that's one of the reasons we were seeking this change in Act 94, is to allow us to essentially use that as a superior tool to the sheriff's-sale process.

Thank you. The Chair recognizes Councilman Clarke.

Thank you, Madam Chair. Good morning. I had a couple of quick questions. One has to do with reuse strategy. As you know, the particular district that I represent has a substantial amount of vacant property currently. As a result of the implementation of NTI, that will probably increase maybe even twofold. And one of the concerns that I hear from my constituents is, what happens after you knock down all of the vacant buildings? what's the interim reuse strategy? what's the long-term reuse strategy? And I must be honest that I haven't heard responses to that in the meetings that I have attended that put me at a comfort level. 49 2/15/02 - WHOLE - BILL 020036 Can you maybe here today put me at Phase 1 of a comfort level and talk about how you get me to Phase 2, 3, 4, and 5? And then I have to figure out a way to get my constituents to 7, 8, 9, and 10.

Let me take the first shot at it. As sit we down and begin the conversation with the Councilmembers about demolition, the conversation about interim and long-term use comes up, that we understand that you just can't run through neighborhoods, tear down a lot of properties, and step away from the communities, as the City has perhaps done traditionally, and I think that's why even before launching this phase of NTI, we've made a commitment and have committed dollars to maintaining vacant land in neighborhoods. And so that's what the cleaning of the 30,000 vacant lots is about. It's not a one-time deal; it's something that we're going to do on a consistent basis. We're also working with the Horticultural Society and others to try and come up with a greening strategy for neighborhoods, and we've 50 2/15/02 - WHOLE - BILL 020036 already begun developing resources for that. We've gotten over $300,000 out of the federal government, we've gotten a grant from the William Penn Foundation, because we do know that when we go into neighborhoods, we're not going to be able to rebuild everything in the short term -- and in some cases, even in the long term. And so we're putting together resources so that the vacant land won't be a nuisance in neighborhoods, and I think if you look at what's going on in a lot of communities -- Frankford, I think, is probably the best example, where communities, working with the Horticultural Society and others, use greening strategies to make vacant lands assets in neighborhoods, not simply problems in neighborhoods. It's not easy to do: It takes resources, it takes a commitment from communities to work with government in order to preserve land. But I think, you know, the question that people don't, in some cases, want vacant land at all, whether well-maintained vacant land or anything else, and there, the conversation with Councilmembers at the very beginning will be one 51 2/15/02 - WHOLE - BILL 020036 that takes planning into account. We'll be asking, you know, what is appropriate in this area? Should it be housing? if so, what kind of housing? and begin trying to identify the resources for that. NTI, although it's a lot of money and probably more money than has been committed by the City probably forever, NTI dollars cannot be the only dollars that are committed to rebuilding neighborhoods. And so we've been very aggressive in trying to identify other resources. We've had meetings with HUD, we go after those dollars when they're available, we went after them with the HOPE VI projects, with the support of public housing. We've engaged -- we've started conversations with The secretary of HUD. We're going to be going to Harrisburg in a more aggressive way as a strategy for attracting additional dollars. We're already talking with private developers. Historically, when we wanted to have housing happen in an area, it's always been affordable housing, and so we always tap into the same pot of money; it's the only resource we know about, and so all we ever have to bring to neighborhoods is our reservoir of low-income 52 2/15/02 - WHOLE - BILL 020036 housing dollars, but we think that there are a lot of other dollars out there. So we're going to be going into neighborhoods, talking with people, helping people understand that it's not going to be a matter of waving a magic wand, but it really is going to be sitting down and having hard conversations with people and putting together real strategies. I think one of the things that I think has been very productive over the course of the last two months is really talking with Councilmembers about how you take ideas to actual -- to the point of implementation so that, you know, when Councilmembers want to see something happen, it's not just a wish, but we actually begin putting strategies in place. And so when we go and talk with you and talk in neighborhoods, we'll begin talking about actual strategies for making development happen.

But it's not going to be overnight. It is going to take decades to rebuild some of the neighborhoods in Philadelphia, but we will move aggressively in order to try to identify the resources to do that. 53 2/15/02 - WHOLE - BILL 020036

Getting back -- an I understand, you know, the development process, that it is a lengthy process. Getting back to the interim-reuse strategy, will there be alternatives other than greening? because some people just don't want green grass, vegetables. I mean, I've heard, as an example, some constituents say, Well, if you tear down those properties, can I have a top lot, or can I have a sitting park for senior citizens, or can we have -- some young folks want to know, can we do a basketball court or some other type of recreation? Some people want to just have it black-topped so you're able to maintain it a lot easier. I mean, are there going to be alternative strategies other than greening?

Yes. I mean, our intention here is to bring resources to bear to stabilize lots, to make sure that there's some sort of interim treatment -- that may be the better phrase to use. We're not just talking about community gardens. And different communities have experimented with different things, from, you know, 54 2/15/02 - WHOLE - BILL 020036 even tree-planting as a deterrent to short-dumping. What's going to be critical here and what we've been doing is beginning to look at other resources that are non-City resources that can support that. And particularly at the federal level, we think there's going to be -- vacant-land management and abandonment is increasingly for many cities becoming a major policy issue, so you have non-traditional federal -- what I would consider agencies that we may not have historically thought of as a resource for urban communities, you know, funding projects in Chicago around land-management strategy. Some of it can come out of the Environmental Protection Agency. Here in the City, there was a treatment that was done to -- how can you treat asphalt, a lot for recreational use that protects the watershed, using new techniques. So that's the way we're looking at it. And we think there will be a host and a variety of treatments. The strategy planning (indiscernible) for each neighborhood will start talking about, you know, those different type of treatments.

Okay. Councilman Rizzo originally asked this 55 2/15/02 - WHOLE - BILL 020036 question on my behalf in the Capital Budget hearings the other day, talked about regional choice communities which were designated by NTI, and they spoke specifically of an area -- another part of my district, in Logan Square, where it is clear that there will not be a demolition strategy, there will not be a vacant-lot strategy, but those residents want to participate in this program, and the question was asked specifically about amenities association with those regional-choice type of neighborhoods such as street-lighting enhancement, pedestrian-lighting enhancement, and could, or will, the NTI supplement the capital program's budget in instances of those types of communities; whereas, in the capital budget program, there's a limited amount of dollars to do street lighting or pedestrian lighting. Will NTI, particularly in private-activity bond dollars mbe in a position to be utilizing those kind of neighborhoods?

You know, I think we're going to have to be very judicious. These -- I think we're going to have to make very judicious decisions about that. 56 2/15/02 - WHOLE - BILL 020036 In the very first presentation that the Administration gave, we started talking about what the appropriate role of government is in various kinds of neighborhoods, and one of the things we identified for regional-choice neighborhoods is a marketing strategy. And so, for example, working with the Center City District, the Center City District has contacted the William Penn Foundation and obtained dollars in order to market regional choice in some of the other neighborhoods in Philadelphia. I think when you start talking about doing street lights and some of those other kinds of expenditures, it's going to require a very careful analysis of what -- of what role that plays in stabilizing neighborhoods. These -- as large as the pool of dollars is, it's finite. The strategy is a strategy of trying to stabilize neighborhoods and eliminate blight. And I think we're going to, time and time again, have to ask as a group very tough decisions about street lights or, you know, curbs and sidewalks, because that will rapidly blow through all of the dollars. And so we're going to be 57 2/15/02 - WHOLE - BILL 020036 framing, you know, for ourselves and for others very tough questions about what an appropriate expenditure is. It may be that there are other pots of money so, as you know, the foundation community has taken a real interest in providing that level of amenity along the Parkway, you know, so we'll be looking at that as a potential resource. But, you know, I don't that's it's adequate to say that this will be the first stop, and we'll be working very hard to identify other resources.

Let me be clear that I understand your response. You say although in terms of priority, these regional-choice communities may not be at the top of the pole, but there is a clearly identifiable -- and correct me if I'm wrong -- did I characterize that wrong?

Yeah, I think you did mischaracterize it. I think that all of the neighborhoods are of equal importance. I think that there are different strategies, and the role of government might be different. 58 2/15/02 - WHOLE - BILL 020036 So, for example, we do understand that the City has to be as interested in regional-choice neighborhoods to assure that they continue to be regional-choice neighborhoods, and so we're going to be engaged in thinking about those issues, but the government's role might be different.

But there will be concurrent planning initiatives in those various communities.

That's right.

That's right, and be working to identify dollars. And so, you know, when we went to the William Penn Foundation, and they said, Well, you know, we'd like to work with you on some marketing. You know, just because it was regional choice, we didn't say, No, that's not our priority. You know, those neighborhoods are critical for the health of the City, and so we're going to be spending no less time and energy.

And those initiatives will be --

If I can just add --

I just want to clarify. Those initiatives will be run out of the 59 2/15/02 - WHOLE - BILL 020036 NTI Office? I mean, will it be the Center City District? I mean, I just want to know, who's the catalyst to get this discussion going in those regional-choice communities?

I think one of the things that is important to understand is that we feel that government doesn't have to do everything, and that one of the things that we believe that the NTI initiative does, it says, This is our priorities and these are why. And it gives others an opportunity to kind of step up to the plate and define a role. And I think the perfect example of that is the marketing campaign. We didn't initiate that, but people knew we said, you know, that we have strong, good neighborhoods, that one of the things is sometimes we don't -- just like we have a public-relations campaign, if you remember in April, for tourism, why don't we have a public-relations campaign for marketing the amenities in our neighborhoods? So we -- you know, and someone else said, Ah, we see a role for ourselves in that. We would like to go raise money, develop that, and convene a 60 2/15/02 - WHOLE - BILL 020036 steering committee of public and private individuals, and then there are also -- and we raise the money for that. And I think this is an opportunity to invite others to initiate and so, like, help carry the ball.

That's fine. I just want to know who's going to facilitate the initiatives in those particular neighborhoods. Is it --

I think that if you look at our housing-reorganization plan, we've tried to -- our proposal is to develop a housing organization that reflects the NTI framework, and so there will be an Office of Market-Rate Housing. The City has never had an Office of Market-Rate Housing. Market-rate developers, you know, call the Councilperson, some of them are coming into the City through the Commerce Department. They go to Maxine Griffith, the City Planning Commission. So we will have an Office of Market-Rate housing in the new organization so that folk on the outside will know where to go. These people will be specifically focused on addressing the conditions in those neighborhoods. 61 2/15/02 - WHOLE - BILL 020036

Okay.

And so we hope to, for the first time, have that be a core function within the whole housing apparatus.

Okay, Thank you, Madam Chair.

Thank you. The Chair recognizes Councilman Ortiz.

Thank you, Madam Chair. Madam Chief of Staff, on the issue of consolidation of the agencies and departments, where are we on that and what is the process and timeline that is going to finally -- and what's going to emerge at the end?

What our vision is, our goal is to have the new organization structured so it will be included in the FY '04 budget. Right now, we have an RFP out on the street, soliciting from consultants -- you know, soliciting consultants who will help us, that we can contract with to help us create in this new organization.

Excuse me, you're contracting with somebody to come in and advise you to do the consolidation? 62 2/15/02 - WHOLE - BILL 020036

To actually put together the various components. For example, one of the things we don't have in the City are any procedural manuals. I think that the whole acquisition disposition got out of control because it's as much guided by word of mouth, urban legend as it is by anything else. The last manual for acquisition disposition in the City was done in 1974, and so we've done a very, very detailed study of, you know, what goes on now. We have some very clear ideas about how it ought to work. But actually creating a process and procedure and documenting that is the kind of thing that we've never done.

That's from the RDA? In 1974, the RDA produced that document?

That was the last time. Having worked at the Redevelopment Authority, I can tell you that there's a lack of consistent documentation. If you go to one person, you get one set of procedures, you know, you hear about some memo that's supposed to exist that requires that something happen. And what we're --

So this consultant, his 63 2/15/02 - WHOLE - BILL 020036 job is going to come in, one, to update the manual, the procedural manuals?

Let me -- it's more than just updating a procedural manual. I think everyone in this room can tell you all of the horror stories about our acquisition and disposition systems. They're very much antiquated, they're at least 98 percent manual; even the components of it that's automated is based on, I think, an IBM computer system that even IBM doesn't service anymore.

The issue of sheriff's sales is going to be included in that process?

So what we're looking at is a process redesign of our real-estate operation. And as Herb talked about, you know, primarily, we're focussing first and foremost on the tools we use for land assembly and redevelopment activity. Second, it's also going to look at the rest of government. If we're going to reconfigure a housing agency, you know, some -- yes, you can move people around; yes, you can change names, and maybe that's been done before, but we never really designed the processes, we never created a formal -- 64 2/15/02 - WHOLE - BILL 020036

Well, give me a vision of what it is that we foresee, because, you know, this is one of the problems that we've had going back and forth, and this is going to be probably one of the key elements of whether this thing goes forward or not, how you structure this brand-new entity in the amalgamation of all of these different institutions.

Mm-hmm.

RDA, OHCD, what is PIDC, how is PIDC going to function into this?

Mm-hmm.

How is -- what is it going to look like? Give me -- two years from now, I'm going to be sitting here, you're going to be sitting there; what am I going to be asking you about in terms of these institutions?

First -- and, again, we're willing to give out this document again to make sure it's incorporated at the public hearing. We included in our Administration testimony what we call the "high-level functional organization" for what we're calling the "Office of Housing and Neighborhood Preservation" and how the other 65 2/15/02 - WHOLE - BILL 020036 different or existing entities fit within that and, you know, the role of the Redevelopment Authority, OHCD, how that would be reconfigured or reorganized under the housing and neighborhood preservation, and we can resubmit that to Council Second, when you talk about the vision and what does the process redesign accomplish, I mean, my vision will be very simple. I mean, you know, we state that we want to make sure we can do -- I'm just saying this -- 1,000 dispositions a year and that we want those 1,000 -- we want to be able to timeline when we have title to getting it into someone's hands, we say, That ought to be 90 days, because if you were in the private market and you went to buy a house, usually it's 90 days from the agreement.

How does that happen? I mean --

We're going -- the happening of that --

Does OHCD merge into RDA? PIDC, what happens with their role? What is going to be -- how is that going to come into the overall aspect of this new entity that is going to 66 2/15/02 - WHOLE - BILL 020036 be, I would imagine, on top? Okay?

No, it's not on top. What we would do is -- the functions, unless they're legally-mandated functions, the functions and the personnel that are needed to support those functions would come under the umbrella of the Housing and Neighborhood Preservation Office. The RDA in particular, for example, will then have a relationship, and because of its special and unique powers, it would still exist as an organization, but it would have a very clear and defined relationship with the Office of Housing and Neighborhood Preservation, and that its roles and duties and responsibilities will be set out in intergovernmental cooperation agreements, which is anticipated by the Commonwealth.

So there's going to be an Office of Housing Preservation, and what is the other title to it?

And then it will four lines of businesses. It will be the Office of Housing and Neighborhood Preservation and --

Who merges into that, OHCD? 67 2/15/02 - WHOLE - BILL 020036

The functions of the Philadelphia Housing Development Corporation, certain of the functions that the Redevelopment Authority, and the current functions of the Office of Housing and Community Development would all be transferred along with the supporting personnel under the Office of Housing and Neighborhoods Preservation.

So PIDC, because it's industrial development and business, doesn't fit into that.

This is housing and neighborhood preservation.

So that PIDC is something apart.

No, mm-mm. And, again, I think it's -- visually, it's much more -- one can see it and we're happy to send out and sit down with you and walk through each of the lines of businesses. We did share that with Council.

So how are the legal technicalities, the aspect of it? because, like you said, OHCD has certain aspects that are legally mandated. 68 2/15/02 - WHOLE - BILL 020036

Well, OHCD is the office -- is a part of the Office of the Mayor. Its role was determined, I believe, by executive order. I mean, one can, you know, change --

Well, the funds are usually already targeted for certain populations, right?

Well, let's not confuse the -- I guess you would call it the "operating mechanism" or "apparatus" with the restrictions on the funding requirements.

But what we want to get to is an understanding of how this thing is going to function.

Right. The Office of Housing and Neighborhood Preservation will oversee the City's housing and neighborhood preservation activities, but not just exclusively to CDBG dollars. We envision, as a part of this Office of Housing and Neighborhood Preservation, a division or a unit that focuses on market-rate housing. Historically in the City, our housing policy has been driven by what we can and cannot do with Community Development Block Grant and 69 2/15/02 - WHOLE - BILL 020036 (indiscernible) and to a lesser degree, certain State funds. So we kind of constricted our ability to work in neighborhoods by tying our mission, so to speak, to the federal requirements for certain funding. What we've done is, we said, What is the mission of this office? and then there would be different sources and resources to advance that mission. Some of it would be federal, some of it would be State. You know, bond proceeds will play a role in that. And the mission is housing and neighborhood preservation. And the reason why we went to the discussion about neighborhood preservation going back to the original NTI framework -- in fact, going back from my understanding, comments from vary Councilpeople about the limits of CDBG is that we need to look at our city and its neighborhoods in their entirety and then craft strategies that are specific to their strengths and to their opportunities, as opposed to having all of our housing endeavors driven simply by what federal funding is available. And so that, to me, is the paradigm shift. 70 2/15/02 - WHOLE - BILL 020036

District 33 employees are going to be impacted by this reorganization, and what are the discussions that are going on between District 33 and the Administration along these lines?

We are -- we are beginning to talk with a number of different stakeholders about the vision that we have. We're talking with -- with people within the agencies trying to validate the basic model. I think that there are going to be extensive conversations that are necessary, negotiations that are necessary with the union if this is going to be successful.

Are they taking place now, or are they going to be taking place?

No, there have been conversations. I don't think -- you know, I don't think we've reached the point yet that, you know, we're engaging in the way that we ultimately need to, but we understand that Jeff Brown and the other leaders of District Council 33 are critical. One of the things that the consultant is going to be doing for the City is helping us create job descriptions. The job descriptions in some of 71 2/15/02 - WHOLE - BILL 020036 these organizations, to the extent that they exist at all, reflect a 1954 vision of rebuilding neighborhoods. We've got to bring those forward so that they reflect the kind of challenges we have now. We've got to have -- you know, and we're going to have to provide training for people so that, you know, they can carry out the kinds of challenges -- you know, meet the challenges that are in our neighborhoods. So, you know, all of that is a part of our vision. It will take a lot of interaction and participation by the union. We're not there yet.

When do you foresee meaningful discussions with the union taking place; two weeks from now, three weeks?

No, I think -- well, I think --

How far along in the process are you going to begin discussing it with them?

We've begun discussing. I think that as we begin refining the plan, you know, talking about how many positions and which part of 72 2/15/02 - WHOLE - BILL 020036 the organization, I think those conversations will take a whole different character, and that's what I meant by "meaningful," not that we're not sitting down and engaging. I think, you know, there are tough issues around pension. You know, we understand, you know, that this is not going to be easy to do. I think that, you know, City Council was critical in laying down the challenge. You know, last year, we were asked, you know, what is the Administration's plan for reducing the administrative burden to the CDBG budget? We have taken that charge seriously and are really proposing back a very comprehensive plan, and as soon as the document comes up, you know, we'll reintroduce it. For doing that kind of consolidation, you know, we understand it's going to be difficult, but I think that we all understand that the vision for rebuilding neighborhoods can't happen if government's not willing to also change in order to accommodate the challenges.

Thank you, Madam Chair.

You're welcome. The Chair recognizes Councilman DiCicco. 73 2/15/02 - WHOLE - BILL 020036

Thank you, Madam President. My question is for Mr. Wetzel, probably more for L&I, but I was just curious. We were talking earlier about the process and getting certain pieces of legislation in place that will make the acquisition or taking of these properties easier. A year or two ago, we passed some legislation in this Council -- I can't remember the number of the bill, but I call it "the broken window bill," and everyone agreed that that was a good tool to get to that point where we were able to, as a city, agency, or whatever, be able to today those properties because the liens would be so sufficient, if the -- if the fines were imposed on a daily basis, $300 a day for every single broken window, we would get to that 150 percent of the market value, and in many cases, probably in less than 30 days or 30 days or so. Have we done anything with that, with the implementation of that bill? And if you can't explain it, I could understand it, and maybe it's more L&I, but it should fit into what we are 74 2/15/02 - WHOLE - BILL 020036 talking about, and why aren't we using that legislation already?

I will have the commissioner come over. There were two different pieces of legislation for liening. I know that you had asked about this at the last hearing. One of programs had begun and they had actually started doing the liening. I will have the L&I commissioner come over and answer in detail what's going on.

22nd and Arch, my signature building, right? Thank you. Thank you, Madam President.

Thank you. The Chair recognizes Councilman Nutter. Is he in the room?

(Inaudible/off-mic.)

Councilman Nutter, do you want to yield to Councilman Cohen?

I'll be glad to yield.

Councilman Cohen.

To Mr. Wetzel, in my maybe not-too-well-informed judgment in this area, 75 2/15/02 - WHOLE - BILL 020036 'cause I haven't dealt with the Redevelopment Authority too many times, I like the changed atmosphere in the way in which the department operates, and I wanted to thank you for bringing that about. Now, you referred to changes that are needed at the State level and at the City level to consolidate ownership in one entity for the City. Could we move ahead at the City end? Is there any State law that has to be changed to permit bringing currently into a single City ownership the property owned by the four agencies you enumerated? Because I think people go by example.

Mm-hmm.

If we could do it citywide within the limitations of law, I think you'll do a great favor to the State legislature 'cause you'll that something could happen to the archaic method in which we deal with land transfers.

Yeah, let me say I don't know if there are any legal impediments. I know what we're looking at is what would be the form of that; would it be a quasi-government non-profit-created? 76 2/15/02 - WHOLE - BILL 020036 You know, under the City, would it be title-held by the City itself? And I think we're doing that research now to make that determination. And the process would be, for example, where hypothetically PHA owns 800 vacant lots, for example, that are in their inventory for which they have no future plans, you'd want to go -- and PHA, it requires HUD approval from HUD in Atlanta, Georgia, of all places, but they've got to submit this to Atlanta, Georgia, and get approval for each parcel of land that they transfer; for example, the Public Housing Authority. What we would want to do here is go through that entire inventory and, let's say, declare 800 of those surplus and go to HUD for approval of moving all 800 of those into the land bank at one time. So we're working on the mechanism. It hasn't been finalized yet, but the concept is, we create the mechanism and then the entities deliver the land to that mechanism.

May I urge upon you for consideration just the reverse approach; to instead take one property and try to run it through HUD, 77 2/15/02 - WHOLE - BILL 020036 and you'll learn what the difficulties are?

Well, we have, sir.

You may by the number, 800 or even a hundred, create almost an insuperable obstacle to doing anything, because with we in government are not known for our courage to embark on a new path; we're always frightened about new paths, so we're looking for a safe way. And I'm fearful you'll never get any HUD administrator or HUD lawyer to spend sufficient time to feel comfortable with this mass transfer unless you have first established a procedure in an easy way for them -- one properties or two properties at most -- and then they might be comfortable in doing it.

Councilman, we've actually -- to answer that, we have some small-scale experience with HUD with packages of four and six and eight and as many as ten properties at a time, and what we've uncovered is, whether it's one or fifty, it's the same procedure. And I do agree with you, though, that it would be good to have a meeting with HUD and a heads-up rather than just submit 800 at one time.

You'll frighten them to 78 2/15/02 - WHOLE - BILL 020036 death.

Right. To have concurrence that this is part of rebuilding neighborhoods and we need this federal assistance.

The reason I discuss that with you is that these same kinds of discussions have occurred during the 35 years that my Council period of service spans. At various times, people get the same ideas, and then they always -- nothing ever happens and, therefore, I'm suggesting, if we can bite off a little piece, get it underway, we may really start, you know, the development of a series of building blocks on which we can built.

Yeah, your advice is well-taken.

And you're the kind of person that I think might be ready to do that. Thank you.

Thank you, Councilman.

The other question I have, if I may, Madam President, is, in my community, the 17th Ward where I am the Ward leader and Councilwoman Donna Miller is the District 79 2/15/02 - WHOLE - BILL 020036 Council member, and I think the problem is a general one in the northwest, we have terrible problems with apartment buildings ranging from two units, they can be much larger units. And is there any City department that deals with the specific problem, say, of apartment houses? I think their problems are altogether different from the problem of the single vacant home. And because blight to us means a vacant apartment building, because people gather in there, there are always report of women being dragged in, we never know whether they're true or not, sometimes we get information from the police, we don't know whether we want to go to the police to confirm it, but we'd love to be able to go to the police and, say, disprove that an attack occurred, but if they confirm it, it's only worse in the neighborhood. But the places are dangerous, they're dirty, they gather lots of trash, and they deny people an important availability. Senior citizens desperately need housing in Philadelphia, and they're wonderful for senior citizens because even if they go up three our four or five flights, as 80 2/15/02 - WHOLE - BILL 020036 long as they have an elevator there, it's safe for senior citizens. And we find that the community tends to accept housing for senior citizens, they don't raise all the questions that they raise in other kinds of housing, in the single-family housing. So I'm asking Pat or Joyce Wilkerson, because I think you're the two that would know, is there any special intention, and if not, I would urge that you develop some method of separately dealing with apartment housing. I think they create unique problems, and will be (indiscernible) tremendous benefit for the City if we can learn how to stabilize them, how to give them support where economic support is needed, because that's what I assume is the problem, that people in the private sector have not found a way to convert many of these into a worthwhile economic venture and as a part of the blight program, and that gets you in, Pat.

I mean, that would be one of the things we look at. As part of our preservation strategy, we acknowledge that sometimes these small vacant apartment buildings have been problematic in 81 2/15/02 - WHOLE - BILL 020036 neighborhoods, and sometimes maybe the reuse may not necessarily be another apartment building. I think one of the more successful, I think, strategies that was used by a CDC working with a for-profit developers as part of a joint venture was taking a scattered-site, garden-style apartment building, you know, where there was like the duplex units, and then in some instances, converting those into market-rate home-ownership units. And Herb could -- they underwrote that project. We also had the Law Department to begin to look at other jurisdictions in terms of what powers we may be able to use to think about doing more than just the traditional citing and liening. I think one of our frustrations is that we in the City, you know, we can lien it, we can cite it, but if the owner is not around and we can build up all the liens, you know, the challenge is if you take it, you know, then is the City the owner, if you don't have the resources to redevelop. But we're looking at other strategies that other cities have been using with these smaller apartment buildings. I think Boston, in 82 2/15/02 - WHOLE - BILL 020036 particular, they call them "triplexes" or something, have three-tier buildings that they've done combination home ownership/rental type activities. They're too big for single family triple-deckers. I think they're using different kind of strategies there.

I know the Redevelopment Authority is involved in one on the (indiscernible) in the Suffolk Apartments.

Right.

That's a huge project, and it is not an example of the best work done by City agencies in the management over the last five or six years, but we need a strategy for those that are already owned.

Right.

But I'm thinking particularly of the smaller ones, not as gigantic as Suffolk, but the ones that run from 2 to maybe 16th and Grange Street comes to mind. It's a building that's been vacant for at least ten years, an apartment building. Somehow it defies the elements, the structure's still sound, people and private investors or land owners come, look at it, 83 2/15/02 - WHOLE - BILL 020036 and then when they add it up, they always decide the arithmetic doesn't make sense for an investment.

Mm-hmm.

It's a blight to the neighborhood. We're always concerned that it's a danger to people and youngsters in the area, and sooner or later, it's going to be become structurally unsound even though it's managed to somehow defy the elements so far. It seems to me that a very effective and a cost-effective way would be to find some method not necessarily of becoming a City apartment, but that's kind of subsidization, to my colleague Councilman DiCicco, that I would gladly support. If it needs governmental funding to make it available and make it economically attractive to investors, I think that would be the best kind of investment to make.

Councilman, I think --

And in Northwest Philadelphia, that's a very urgent issue.

Right. You've raised, I think, an important issue. There are a lot of 84 2/15/02 - WHOLE - BILL 020036 strong residential home-ownership neighborhoods that have a small number of apartment buildings that are the blight, that the homeowners in their houses are in very good shape, and I can think of two. Pat mentioned one at Wissahickon and Manheim where a 200+ apartment complex, owned by some New Yorkers who milked it, was destroying the neighborhood; and the other, I believe, would be Councilwoman Krajewski's district, the Carl Mackley Apartments up in Juniata Park, surrounded by solid home ownership, but it was the blight, pulling down the rest of the neighborhood. If you owned a house across from the Carl Mackley and you put a for-sale sign on it, it would have been difficult to sell that house, given the condition of that. And we intervened in those, and those are larger ones, I understand, but we also, I think, need to look at that 14-, 20-unit building that's also pulling down the neighborhood, and I think you make a good point. And I think we've talked about the larger ones and we need to talk about the medium-sized ones that you're bringing up.

Thank you, Madam 85 2/15/02 - WHOLE - BILL 020036 President.

You're welcome. Councilman Nutter, I'm sure that members of the Administration will be here for the remainder of the hearing. If you're not ready, can I go on with the witnesses that we have?

Sure, sure.

Thank you. Anyone else have questions at this point of the Administration? (No further questions.)

Seeing none, I would ask Mr. McPherson to call the first witness.