Committee Hearing, March 29, 2004

If I could say, the surprise was that there wasn't as many string demolitions, contiguous demolitions, in the city as there were when we developed that bid. And that we planned for stuccoing of walls, but there was less walls that we were required to stucco when the plan was created. And we didn't realize that we would have more walls to stucco under NTI.

Could you explain why that was? With all your experience and with the NTI and with this Hill International, a 25-year-old company, approximately, with worldwide experience --

Hill wasn't part of that.

-- why wouldn't somebody have said at some point, you know, these costs don't include the proper amount of stuccoing, the cost is going to shoot up one 419 RESOLUTION NO. 040095 - 3/29/04 of these days?

Councilman, Hill was not a part of that plan when we put that together. That was in the early part. And it was done by the Managing Director's Office, myself, and several people in the Managing Director's Office, and given to NTI.

Councilman Cohen, we do have other Council Members that would like to be recognized.

Of course you do. And I waited patiently for many hours many times.

Do you mind if we give them a chance, and we will have the second go-around?

Oh, no. But I wish the Chair would employ that method when others also speak.

I think I do.

No, I don't ever remember your doing that during the course of this hearing.

Councilman, you 420 RESOLUTION NO. 040095 - 3/29/04 have been questioning now for minutes. 3

Of course I will 4 yield under those circumstances. 5

I knew you would. 6 And we do have witnesses that have 7 been sitting here. I am sure that they may 8 have to be leaving to go to their place of 9 employment, also. 10 So, if you don't mind, we will do a 11 second go-around. 12

Well, I do mind, 13 in that I am right in the middle and I am 14 going to have to start all over again. 15

Oh, but that will 16 give you an opportunity to -- 17

But I will yield 18 to my colleagues. 19

-- to think and 20 ask more questions. 21

If anybody has to 22 leave, I would be glad to yield.

Councilwoman Tasco, I believe you are next.

No, I changed 421 RESOLUTION NO. 040095 - 3/29/04 my mind.

Councilman Goode.

Thank you, Madam President. Ms. Smith, I did get a copy of your formal responses to the questions asked last week. And own it says, please provide a list of tax credit development projects, parenthesis, Councilman Goode. I did not request a list of tax credit development projects. I think we partially went through that earlier. What do you believe that was in response to?

That, again, I had various staff people taking notes, and we got together and ran through the notes. I thought I recollected -- it was a lot of questions and a very long day, as you remember, last Monday. I apologize if we missed that one. I will sit down and get specifically the question you want answered, and we will be responsive to that. 422 RESOLUTION NO. 040095 - 3/29/04

Is the response, in terms of tax credit development projects, do you believe it was probably meant to be a response to the number of housing units produced?

I just recall the question coming up about tax credit projects. I understand it is not responsive to your question at all. I do understand that.

But even in the response this morning, which I consider to be nonresponsive, I am really just trying to find out why, even in discussion of housing production, you would mention tax credit units as it relates to NTI. The reason I asked the question is, you stated last week, you stated again this week, that NTI is having a major focus now on dealing with dangerous buildings; that it is primarily a public safety program. But, yet, when we asked for what's happening in terms of housing production, you either cite or give us a copy of tax credit problems, projects. 423 RESOLUTION NO. 040095 - 3/29/04 And I guess my question is, what would be the connection between tax credit projects being approved by the state, I believe, and your demolition locally of dangerous buildings?

Well, NTI, if we looked at -- and I am going to focus on the use of the bond proceeds that was authorized for us to issue. There are, essentially, I think, four core uses of those bond proceeds. One was for the demolition of dangerous buildings. The second, from the very beginning, we have always included bond proceeds for the acquisition of land for development projects.

So is there a direct connection between the tax credit projects and the acquisition dollars that have been spent?

Yes. Particularly in the tax credit projects that are in the pipeline, or the ones, some of them, in '04, may have received NTI bond support for acquisition. I am going to look at the list 424 RESOLUTION NO. 040095 - 3/29/04 and see.

I see tax credit problems approved all the way back to September '02 as part of this list. That's not meant to be related to NTI, is it?

I just, again, wanted to show the development. Because another conversation -- and maybe I misinterpreted the question a little bit, or my understanding of it, I also was getting the impression that people wanted to get a sense of development activity during the last two years. And, so, we listed all the tax credit projects. But, for example --

Let me just make a new request. In addition to the request that tracks whether housing production in NTI areas is up, down, or stayed the same, also one additional request in terms of tax credit development projects. And as you enumerate what tax credit 425 RESOLUTION NO. 040095 - 3/29/04 projects are going on in the city and/or proposed to the city, tell me which have some direct contribution in terms of NTI bond proceeds and which do not.

Okay. For example, there on Chart 5, it shows projects seeking tax credits in '04. I believe things like Belmont Affordable might be included in acquisition. There has been --

I am actually just making a formal request that you submit through the Chair a list of tax credit projects that are going on in this city, approved, that are proposed, and list which projects actually contain some contribution with regard to NTI proceeds and which do not.

Okay.

Thank you. Thank you, Madam President.

You are welcome. Councilman Cohen, are you finished? You are. Thank you. Along with the information -- 426 RESOLUTION NO. 040095 - 3/29/04

I am not finished.

Oh, I am sorry. I thought you said, yes. The Chair recognizes Councilman Cohen.

How did Hill International get the position? Do they specialize in just running big projects? Do they have special experience in demolition? Because I never heard of them in the demolition field.

We issued an RFP soliciting proposals for what we call program management of the targeted demolition program. And I believe that -- time is blurring a little bit. I don't remember exactly when that was. It may have been 2000, around 2002. I believe, from what I recall, we received around seven or eight responses from a variety of firms, maybe ten, from a variety of firms. There was a review committee that 427 RESOLUTION NO. 040095 - 3/29/04 looked at the qualifications. We were primarily focused on the project management experience and project administration experience, overseeing large projects and managing that. And making sure particularly projects which have a variety of actors and players. A lot of times, for example, as I talked about, L & I place a role, Working District Council plays a role. Looking at the bid packages, looking at our specs, developing these specs which are very detailed and complicated and paperwork heavy, we were looking for experience in that area. And they were one of the stronger candidates.

Do they have anything to say about whom the contractors are that are hired for specific jobs?

No. They assist us in outreach, finding contractors to interest them in bidding for us. And they sit, they Chair -- I want to say Chair is the wrong 428 RESOLUTION NO. 040095 - 3/29/04 word. They get together a group of people to approve contractors to make sure they are qualified.

Do they have anything to do with the choice by the contractor of subcontractors?

No. Only the ranges that are set by Minority Business Enterprise Council is what dictates to who, or the small businesspeople required in the ranges. But other than that is correct, the contractor is free to hire whom he wants.

They don't have anything to do with the contract between the prime contractor and the subcontractor?

No. No; that's between the contractor and the sub.

Well, why would Hill International play a role where there might be a dispute between a contractor, the prime, and the subcontractor?

I mean, I would assume if there is a dispute, they may bring the parties together and try to work it through. 429 RESOLUTION NO. 040095 - 3/29/04

They are out in the field with us, along with my inspector. And they have the ability to have written up what needs to be done. But the NTI process will help settle any disputes between the subs and the primes.

Which process would?

The NTI process. L & I --

What is the NTI process?

I would say, in my mind -- it is probably something I made up a second ago -- but it would be myself, Jay McCullough, Hill International, the inspector that works for me, and the inspectors that are out in the field, any inspector out in the field, to see what the problem is, and then we make a solution to the problem. Contractors doing unsafe work, we stop it. You know, that's stopped right there instantly. We don't want unsafe work. We don't want damage to our adjacent properties. 430 RESOLUTION NO. 040095 - 3/29/04 So it is just an oversight on the contractor to make sure the sub and the prime are doing the work properly. That is our function, that is what we are asked to do, and we do it. So that's what I call the NTI process.

You call that the L & I process?

NTI process. L & I -- hopefully L & I and NTI. It is one of the things that the Mayor asked us to do, NTI and L & I, is to get our specifications and create them to be similar. And, in most cases, they are very similar, they are exactly the same.

The reason I raise these questions about the prime and the subcontractor is that, in an instance in which there seems to be a distribute involving the subcontractor, and a meeting with the general contractor was held, and Council has a staff official that also has a responsibility with respect to seeking to ensure minority 431 RESOLUTION NO. 040095 - 3/29/04 representation, was trying to be present at meetings to try to help get the situation clearly understood and then resolved. Jay McCullough ordered the Council representatives not to appear and said he is not welcome, said no one from Council is welcome. And that made it appear that Jay McCullough thought that he was the person. Nothing was said about you or anybody else. It is the same situation, Ms. Smith, that I raised the other day.

Part of the pressure, Councilman, for that was created by L & I being unhappy with the walls not being stuccoed in a timely manner, with that particular contractor. And we had to resolve that because that was one of the things that I believe that we did the most to improve in NTI over what L & I was doing, was having the walls stuccoed in a timely manner. And this particular contractor was not fulfilling that part of the deal. 432 RESOLUTION NO. 040095 - 3/29/04

The contractor or the sub?

The sub.

And was that part of his contract?

To stucco walls in a timely -- yes, sir, it was.

Now, who can the Council representative talk to or get together with in an effort to resolve the matter?

I think what I would do is set up Mr. Solvibile and Mr. McCullough and myself can sit down with the Council representative. Again, I think the challenge here is that we do have contract requirements. And we try to make sure that the subs, you know, conform. But, ultimately, the sub reports to the prime. So lots of time we convene meetings to try to resolve issues.

Then we can call both of you, and you could arrange to meet, you could bring whoever you wanted, Jay 433 RESOLUTION NO. 040095 - 3/29/04 McCullough or somebody else? We were led to believe that Jay McCullough is the only one who makes the decision, and his word was final.

No. Whenever we have a problem, it is the team that looks at the issues. They try to resolve it, they try to resolve it in the field. If they can't in the field, there is followup meetings. And, as I said on Monday a week ago, you know, I understand the issue with one particular contractor. And I am more than happy to sit down and see if the situation can be resolved amicably, if it can be.

What is your position with respect to responsibility of the city to assist people who desire to become subcontractors or who have become subcontractors? Maybe they knew what they were getting into, maybe they didn't. But does the city have any policy? McCullough's point of view, is the city has no 24 responsibility whatever.

I answered to the best 434 RESOLUTION NO. 040095 - 3/29/04 of my ability that question last week, Councilman Cohen. As I stated, the primary way that we are providing technical assistance and capacity building support is through a contract with the African-American Chamber, their technical assistance center. Any contractor can go there, receive support with respect to paperwork, questions. They are also running specific programs to help cultivate people to become prime contractors.

But what if a subcontractor has a question; who does he go to?

You are talking about a contractor that has a problem, that is under contract?

He wants to work, people admit that he is a great guy, but he doesn't know, he doesn't know enough to know --

Does he have an existing contract to do work, or is he looking to get 435 RESOLUTION NO. 040095 - 3/29/04 work? I'm not sure I understand the question.

Well, whatever work it is.

If he is interested in learning about the procurement process, again, our offices will have meetings, like through Mr. McCullough, Hill International, explaining the procurement process. We walk people through bid specs. We have routinely had meetings where we recruit people and explain the process with the bid packages. If the person already has a contract and has run into a problem, they should start first with the person on site in the field with respect to that problem, see if we can resolve it in the field.

Also, Councilman, this contractor sought out at a meeting, as Ms. Smith said, an evening meeting, to entice contractors to participate in the program. I had conversation for about a half hour to 45 minutes with this contractor explaining what needed to be done and telling 436 RESOLUTION NO. 040095 - 3/29/04 him we would work with him. And I believe that people, other people, in that evening did have conversations with the contractor. So there has been plenty of outreach and talking. I dealt with the contractor on the first NTI bid on 31st Street. I dealt with this company and told them what was needed to be done. It is not something that they found overnight that was problems. So there has been plenty of outreach and advice given to the contractor.

Well, I'm not sure whether we are talking about the same problem or not. But suppose we start, would it be appropriate to start, with you, Ms. Smith?

What I will do is follow up with a representative of your office, if you have in mind a specific contractor and a specific issue, I think it is best; as opposed to trying to, in a public forum, talk about somebody, a particular contractor's issues. I am more than happy to sit down, you know, with the contractor, with the 437 RESOLUTION NO. 040095 - 3/29/04 representative from your office, and really take on what that specific issue is.

I am not the Council representative.

You or whoever you wish us to sit down with.

Okay. I will stop at this point, Madam President.

Thank you, Councilman. Are there any other questions? The Chair recognizes Councilman Rizzo.

Thank you, Madam Chair. Mr. Solvibile, Ms. Smith, $9,000, is that what the ballpark is for taking care of one of these party walls, about 9,000?

Yes, sir. 9,000 roughly. About 5.50 to 5.85 a square foot.

Have we ever done an independent, do we have expertise within our own government, to estimate the cost? 9,000 bucks sounds like a tremendous 438 RESOLUTION NO. 040095 - 3/29/04 amount of money for that particular task. I don't know whether scaffolding is required or they have automated and started to use lift trucks to maybe bring the cost down, where they can get a vehicle in to do some of this work. My concern is -- and I bring this up all the time -- are we working as smart as we can? Because you can do a lot of renovation for $9,000, and I would like to be assured that we are doing this the smartest way possible; that we are not being manipulated by two or three contractors that are, "You do these three, we will keep the price high. The next round we will give you the next three." There are a lot of ways where the contractors -- and I am not suggesting they are doing anything dishonest -- have the ability to control the price, when it is limited to a few. So I would really like to see some estimates that have been done by a legitimate 439 RESOLUTION NO. 040095 - 3/29/04 appraiser or a legitimate estimator to make sure that we are getting the bang for our buck here. Because $9,000 can buy a lot of work.

Councilman, I also will provide to Ms. Smith, to provide to Council President Verna, the recent bid that was awarded for stucco work in the City of Philadelphia for emergency jobs, and who. And I think that might at least give you the price that L & I is paying for a square foot right now.

Have you ever had someone, a professional, an engineer, look at the way we do this to see if we can bring the cost down? Like I mentioned, if we have to erect scaffolding on every job that we do, that adds significantly to the cost of any construction work. Have we looked at the new lift devices that are out there, the one-man lifts, the bucket trucks that could be utilized to do this work? And maybe we could move a lot faster 440 RESOLUTION NO. 040095 - 3/29/04 and get a lot more done for maybe a lot less money.

The department, prior to NTI, looked at spray-on application of Portland cement. And Deputy Commissioner Perry, who was also an engineer, had several problems. And we felt that the pressure of it going on the wall may not work properly because there is no wire involved. And that was rejected because we were worried about that. As far as forklifts and such, that's up to the individual contractor to decide. We would not stop them from using that type of equipment.

But my point being is, if they have intensive labor in erecting scaffold, and they are going to charge us $9,000, I would appreciate somebody from L & I or NTI saying, "Wait. We don't want you to do it that way. We want you to do it the smart way, the way the people do it in this century, not the way we have done it a 441 RESOLUTION NO. 040095 - 3/29/04 hundred years ago." I would like to have someone from NTI and also L & I -- because you are spending a bunch of money over there, too -- to look at way to get more creative. That's one man's opinion. I have a lot of respect for Commissioner Perry, and the fact that he is an engineer. That's one person's opinion. I would like to find out if maybe there is a better way that we can do three for the price of one. Again, no disrespect. That's one of our problems in government. We get locked into a step, and that's what we do for the next years, when the rest of the world is 18 doing it differently. 19

We have explored a 20 number of alternatives. We have even reached out, I think, it was the Philadelphia University, and working with them to come up with a treatment process that would even be more energy efficient. 442 RESOLUTION NO. 040095 - 3/29/04 One of the things when you mentioned, you know, can you get trucks and lifts in, it really depends on the street and the size of the lot. Most of these are still in fairly small, you know -- it might work on a corner property. The other thing is, we also have to remember, in some instances we are looking at three-story buildings that are fairly large.

Pat, again, I don't mean to interrupt you. But if you ever watch a new home being built, they have devices called the scissor lift that will go into a space very, very narrow, will go very, very high. And, again, when you are installing -- and I am not suggesting this is the answer. But I am saying that I would hope that we have explored, since we are spending so much money, every alternative when it comes to the way we seal up these properties, the equipment we use, how we do it. Because if we are spending $9,000 a 443 RESOLUTION NO. 040095 - 3/29/04 pop, I don't think there are too many contractors that are going to step forward and say, "I have an easier way to do it so you spend less money with me." It is your responsibility, L & I's responsibility, to come up with a proposal, a specification, and say, "We want it done this way. And, guess what, we are going to pay $3,000 to do one."

Okay. We will definitely look into that. It is a good idea.

Thank you.

Thank you. Thank you very much. Are there any other questions of these witnesses? And, Ms. Smith, you are going to remain until the conclusion of the hearing?

Yes. If I may, I know you are getting ready to go to public testimony, but if we can have a small break.

You can go.

Thank you.

Last week we had 444 RESOLUTION NO. 040095 - 3/29/04 some questions of Ms. McColloch, from the Office of Housing and Community Development. And I did circulate -- I'm sure everybody did receive -- a copy of her responses. Ms. McColloch, do you mind coming to the witness table? There is just one question I wanted to ask you. I believe that I had raised the question about the waiting list for the basic system repairs. You responded that the waiting list varies depending upon the trade needed to perform the repairs, but it is averaging about one year. Heater repairs and replacements are given priority during the winter months. There is no waiting list for heater replacements. How about roof problems and water problems, the plumbing problems; is that a year's wait? MS. DEBORAH McCOLLOCH: Deborah McColloch, Director of Housing. It can vary from less than a year. 445 RESOLUTION NO. 040095 - 3/29/04 I mean, it can vary from eight or nine months, to more than a year. That's why I said the average. That was the number that I called PHDC to get the information to make sure I was providing accurate information. And they said it really depends, as I said.

If I have a bad roof, that can cause an awful lot of damage if you are waiting more than a year -- and I am sure the people have had that problem -- before applying for basic systems. Do you find that that's satisfactory? MS. McCOLLOCH: No. I wish we could do it very quickly. But I think between the.

Why the wait, then? MS. McCOLLOCH: Well, between the time it takes to take the application, and the people submit all the information that they need to submit, and then also getting the contractor and getting the contractor out to do the work, that's about how long it is 446 RESOLUTION NO. 040095 - 3/29/04 taking.

That's a long time. MS. McCOLLOCH: It is a long time, I agree.

That's a long time. And is that the same with plumbing problems? MS. McCOLLOCH: Well, that's why they said it really depends on the amount of work that's being provided for that contractor. So it may be, if there are more roofers under contract, roofers can go more quickly, plumbers are slower. I don't know which one is faster or slower. They were just saying it varies by trade, and that's why I provided that information to you.

I was just curious. As I said, I can understand, you know, people getting a new heater during the 447 RESOLUTION NO. 040095 - 3/29/04 winter months, you know, very expeditiously. But if it is a bad roof, and somebody has applied and they are waiting for more than a year, that can cause an awful, awful lot of damage. MS. McCOLLOCH: Yes.

As can a plumbing problem. MS. McCOLLOCH: Yes.

Okay. Are there any questions of Ms. McColloch? Seeing none, we do have a list of witnesses to testify. And I would like to remind everyone that we have another Public Hearing scheduled at 1 o'clock. Our first witness, Susan Sierra.

Good morning, Madam Chair, members of Council. Thank you for giving me the opportunity to testify today. My name is Susan Sierra. I am the Policy Coordinator for the Philadelphia Association of Community Development Corporations, which represents more than 80 448 RESOLUTION NO. 040095 - 3/29/04 CDCs and other members that are doing the work of neighborhood revitalization all over our city. I first want to say that PACDC is glad to see that NTI's demolition program is moving forward. We are concerned about the increased cost of demolition. And we would all prefer to see abandoned buildings renovated where feasible, but it is a fact that in some cases demolition is the most appropriate option. The pace and increased cost of demolition this year have led to the Administration's request to move up future years' demolition funding into the FY '04 budget for demolition. PACDC does not oppose this proposal. However, the transfer resolution does shed light on the need to rethink the NTI budget over the final years of the initiative. And that's what I would like to speak to this morning. The first thing I would like to do is to call Council's attention to the need for 449 RESOLUTION NO. 040095 - 3/29/04 more funding for housing production. This was a key finding of the recent 21st Century Review Forum report on issues facing Philadelphia. And I would like to quote from the committee's assessment of NTI, if I may. Quote, The trend in housing production under NTI, both rental and home-ownership units, have not been good. There is no money budgeted under the NTI bond issue for residential or retail redevelopment. There needs to be a dedicated source of funding for development, especially for not-for-profit housing. And their recommendation is that the city should create a housing trust fund to support production of new units of housing. Legislation will soon be introduced in this Council to create a housing trust fund. The proposed housing trust fund would be funded at a level of $20 million annually, which would nearly double the city's current investment in housing, in housing production, and would allow hundreds of homes to be built 450 RESOLUTION NO. 040095 - 3/29/04 and renovated each year and thousands of units of housing to be preserved. The housing trust fund could leverage up to $50 million each year to Philadelphia, which is money that's available but which our city is currently not accessing. The key to the housing trust fund will be permanent, dedicated sources of funding, but we believe that NTI bond funds could provide initial seed money for the housing trust fund. And we recommend this Council and the Administration consider using NTI funds as one source for seeding the housing trust fund. I would also like to comment on the need for more funding for acquisition. NTI has allocated a total of $74 million to support property acquisition. About $50 million of this has already been obligated, and some Council districts have already exhausted or soon will exhaust their acquisition funding. The city needs to provide enough funds to support project-specific acquisition 451 RESOLUTION NO. 040095 - 3/29/04 in all Council districts. In addition, there is a need to plan more broadly to support project-specific acquisition in the long term and medium term after NTI funds are no longer available. Without acquisitions, project and redevelopment can't move forward. And we would support reprogramming NTI funds from other uses to support additional acquisition. In addition, we would like to advocate for the immediate implementation of the city recycling agreement to allow funds to be recycled to the city to provide further acquisition funding. We would also like to say that there is a need to improve the process by which the city is managing the acquisition and disposition of vacant property. Conveyance of properties that were approved for acquisition by this Council last year to their eventual redeveloper is moving slowly.

This can cause not only a delay in the project, but can put outside funding for these projects at risk. And we call on the 452 RESOLUTION NO. 040095 - 3/29/04 Administration and Council to make this issue a priority. In closing, I would like to reiterate that housing development is a win for Philadelphia in multiple ways. It provides needed housing options, it revitalizes neighborhoods, it improves the quality of our housing stock, and it leverages millions of dollars in outside funds to the city. Without acquisition and development funding, none of these benefits will be realized. So, in summary, we do believe that demolition can be a worthwhile use of NTI bond funds. However, we believe that other needs, including housing production and property acquisition, should have an even higher priority. We, therefore, urge Council to consider how future year NTI funds can be reprogrammed to support these activities. And thank you very much for your time and attention. 453 RESOLUTION NO. 040095 - 3/29/04

Thank you very much, Ms. Sierra. And certainly we appreciate what you have said about the housing trust fund. I'm not sure about the other funds, but certainly some of the local funds that you suggested in trying to raise some recording fees seem feasible to me. I'm not sure where we get the other funds. And obviously, certainly, we support your statements with regard to acquisition. There are many projects out there and, in fact, many redevelopment areas that can't be completed without the ability to finish up projects and get a few projects acquired so that major development can begin. Thank you very much. Councilman Cohen, you had a question?

Yes. I am convinced that the housing trust fund is also a good one, but that there is no chance of ever getting it here until we do something that prevents a house from having a market 454 RESOLUTION NO. 040095 - 3/29/04 value of one and a half the cost of building it as soon as its completed. Because I don't know who would contribute to the immediate devaluation by 50 percent of the house. So, therefore, I ask, has your group ever studied what could be done, in your judgment, to bring the price down so that the building price more closely approximates the cost of building it, without the need of a federal or state or local subsidy to make it available to the people who live in Philadelphia? For example, the one that comes to mind is, as I understand, that as a labor cost, that's only part of the additional cost. In Philadelphia there is no such thing as a residential rate by the building trades unions. But that in the suburbs, the unions do have, in addition to the regular rate, they consider that a commercial rate, and they have a much lower rate, maybe as much as 30 percent lower, for a residential rate. In other words, if they build a 455 RESOLUTION NO. 040095 - 3/29/04 house privately for an individual, the union rate is much lower than if they are building commercial things. Now, if that were done, that would begin to approximate more closely an equality between the cost of building and the market value. And I feel confident that until we get those two things lined up together, that if it costs $100,000 to build a house, that the market value of it, the sale price, will be a 100,000, instead of 50,000. Do you have any thought on that subject? Have you ever considered the issue of a residential rate being used in the construction industry being used in the city, as well as in the suburbs, or are you familiar with that?

Well --

It is not the only reason, but it is a substantial part of it.

Councilman, I am sorry. I am trying to respond to your question. 456 RESOLUTION NO. 040095 - 3/29/04 You are right that the difference between what it costs to build or to rehab housing and the price for which it can be sold is a problem. And there's two issues, I believe, that drive that. One is that construction costs are higher in this city than they need to be. I do think that a residential construction rate would be a good step towards resolving that. But the other issue is that real estate values in many of our neighborhoods are artificially depressed. In some neighborhoods, unfortunately, a new home that's built, regardless of the cost of building the home and the quality of the work that goes into it, the second that the builders walk off the site, that new home will only appraise at $40,000. And no matter what the -- it costs more than $40,000 to build a house, no matter what efforts we make to reduce costs. So I think that the key, a key need is not only to deal with construction costs, 457 RESOLUTION NO. 040095 - 3/29/04 but also to work on rebuilding the real estate markets and property values in our neighborhoods. And the way that I think works to do that is through community development corporations that have a long-term strategic approach to the neighborhood. There are a number of successful examples around the city of neighborhoods where CDCs have been able to rebuild property values. Unfortunately, that does take investment, until property values get to the point where the private market will function in those neighborhoods. And that's one of the reasons that we believe more funding for housing production is necessary.

Have you ever discussed -- you represent the community development corporations.

That's right.

Have they ever discussed with the building trades unions the possibility of the development of a 458 RESOLUTION NO. 040095 - 3/29/04 residential rate? Because I agree with you, the community development corporations play a very important role in Philadelphia in the development of neighborhoods and the promotion of housing. And I think you are an extremely important force. But I think it would be helpful if you could use your assets, whatever they may be, to help bridge the gap between the building costs and the market rate. Because you do a lot of other good work in the neighborhoods that help to raise the worth in dollar terms of a neighborhood, as well as its intrinsic worth as a neighborhood in which to live.

Well, thank you for the kind words. I certainly appreciate them.

I think most of us would agree to that, clearly. We like what you do. We are looking for ways to expand what you do.

Thank you.

But apparently 459 RESOLUTION NO. 040095 - 3/29/04 money is not expansion of -- the availability of money is not one thing that at this time we are going to be of very much help to you.

Well, just to answer your question, we have discussed the issue. I mean, for example, I have personally brought up with Mr. Gillespie, the director of the Trades Council, that a residential rate would be a good thing. While, at the same time, we certainly believe that people should be paid a fair wage for their work.

Of course.

But I think our feeling is that, really, the city and the Administration need to take the lead on working with the construction unions to find a way, if there is a fair way, to reduce labor costs. And so, you know, we believe that that's something that the Mayor and his staff should probably be taking leadership on. We have brought it up. We will bring it up. It is our position. But I think 460 RESOLUTION NO. 040095 - 3/29/04 you may be valuing our influence too highly, Councilman, if you think that we are going to be able to, through our advocacy with the --

Every little bit helps.

Well, that's certainly our position, and we are happy to share that with anybody who asks.

Thank you.

Thank you. Are there any other questions of Ms. Sierra by members of the committee? Thank you very much. We appreciate your patience. Our next witness. This is a panel, Charles Trotter, Luis Cruz, Jihad Ali, Jim Copeland.

You could just pull two more chairs over, gentlemen. Good afternoon. Kindly identify yourself for the record and proceed with your testimony.

Good afternoon, Council President Verna. My name is Jihad 461 RESOLUTION NO. 040095 - 3/29/04 Ali, I am with the Contractors Roundtable Council. I am a founding member of the African-American Contractors Roundtable Council, a nonprofit organization of African-American and Hispanic contractors who have advocated for the inclusion of disadvantaged and African-American and Hispanic contractors in the City of Philadelphia. Madam Chair, I have copies of my testimony. Forgive me for not passing them out.

Thank you. This gentleman will get it. Please proceed.

I want to thank this honorable Council for giving me the opportunity to comment on this important issue. And I commend you for providing ordinary citizens the opportunity to voice our concerns with the Neighborhood Transformation Initiatives Emerging Contractors Program being 462 RESOLUTION NO. 040095 - 3/29/04 administered by the African American Chamber of Commerce. I will not belabor these hearings with a lot of details because many others, including members of this City Council, have also asked questions about these matters during the previous hearing on the matter held on March 22, 2004 and are awaiting answers to questions raised by the Council President and other Council Members during the previous hearing. However, I do want to emphasize that, in my opinion, there has been and continues to be a systematic and partly successful attempt to mislead the City Council of Philadelphia on Emerging Contractors Program's success, which was questionably funded by the Neighborhood Transformation Initiative. There is no question that the overwhelming majority of the City Council of Philadelphia wants to provide opportunity to all of Philadelphia's citizens under the Neighborhood Transformation Initiative. 463 RESOLUTION NO. 040095 - 3/29/04 What is most disheartening is some organizations and businesses have attempted to mislead the City Council of Philadelphia, the Mayor, and others, including the administrators of the Neighborhood Transformation Initiative, by misinforming them on the, quote, successful, unquote, minority participation specifically of newly formed emerging demolition contractors in the awarding of prime contracts, subcontracts, and man-hours employed on the projects by the Neighborhood Transformation Initiative. The Neighborhood Transformation Initiative administrators have the responsibility to establish policies and procedures which govern inclusion of existing minority businesses in NTI projects. When this honorable Council enacted legislation to ensure participation in the Neighborhood Transformation Initiative, there was and is a requirement that monthly reports be submitted to this Council which reveal the utilization of African-American contractors in the contracts awarded by the NTI. 464 RESOLUTION NO. 040095 - 3/29/04 There was testimony by Ms. Smith that no reports have been filed with this Council to date, almost a year after this program has begun. In my opinion, there continues to be an attempt to mislead the Council of Philadelphia. There was testimony by Ms. Smith that the Emerging Contractors Program is placing new start-up demolition contractors on par with established majority demolition contractors. With no statistics submitted, how can this Council determine if this program is successful? The City Council of Philadelphia needs to know if this program has been a failure or not. We are not allowed to participate in the Emerging Contractors Program as administered by the African-American Chamber of Commerce. We have been removed from participation in this program, even though we are established contractors. The Contractors Roundtable has also 465 RESOLUTION NO. 040095 - 3/29/04 been removed from the Chamber of Commerce's website after we asked questions about the program, apparent conflicts of interest of its directors, nepotistic employment practices, and we were given no answers. We know that minority contractors through this program are not being put in a position to compete as prime contractors because we had the best chance because of our members' experience of being able to participate in the program and run this program. And I also would like to add, on the last bid that was awarded on Friday of last week, two of our contractors participated and submitted bids. That's only hours after we were 19 informed, after we had a meeting with the NTI, 20 Ms. Smith's office, director -- actually, a representative of Hill International, Mr.

Griffin, who told us of an opportunity to bid that was available on the web. We went to the web, and we successfully put in -- we weren't successful 466 RESOLUTION NO. 040095 - 3/29/04 in the bid, but we were successful in answering the opportunity for the bid. We put in a bid, and that's only 5 hours after we were notified of the bid. Luis 6 Cruz put in a bid, as well as Toratto 7 Construction, two of our members. 8 And I don't believe -- there was one 9 member that Ms. Smith was claiming that is a 10 member of the NTI Emerging Contractors, the LP 11 group, who put in a bid and was the successful 12 bidder. out of 20. 13 To this very day, there is no 14 reporting information regarding how this 15 program is progressing or how many contractors 16 have successfully completed this program and 17 can compete along with prime contractors. 18 We are requesting a copy of the 19 report, as required by legislation, and that 20 the City Council of Philadelphia reviews the 21 contract that was signed by the Chamber for 22 this program. 23 The Hispanic Chamber of Commerce 24 does not have a similar contract. Mr. Cruz is 25 here as President of his Chamber of Commerce, 467 1 RESOLUTION NO. 040095 - 3/29/04 and his business has been around a long time. We are asking this Council to carry out their responsibility as required by the legislation authorized because, in the end, everybody wins. Ms. " "Emerge" is beginning. And I also would like to give an acronym, an acronym of DIG, which is deception, ignorance, and greed. And that's really what leads to the misuse of public dollars. And I also would like to give a quote. None of us is as smart of all of us. And if you exclude half of us from a process, how can it be successful? I am asking that Council not favorably move forward Resolution 040095 until after you have gotten the answers that you have demanded. This Council went through a great deal of effort to enforce the legislation last 468 RESOLUTION NO. 040095 - 3/29/04 year on April the 23rd. And on the street, on the field level, we know that one Councilman lost his seat in the fight for inclusion. We didn't fight to have programs established that were going to benefit people specifically. We want programs in place that are fair across the board, and we want to give opportunities to all the citizens of Philadelphia. And specifically we know, as Ms. Smith quoted earlier, that a great deal of the African-American community has been excluded from contracts, through no fault of the city. But it has really been because of the industry, a practice that has been in place over 30 years. So we are asking that this Council be vigilant to make sure that everybody that says that they are about the same aims of this Council, that you carry out your responsibility and scrutinize the programs that are in place. I also would like to point out to 469 RESOLUTION NO. 040095 - 3/29/04 Madam President that, by the sheer fact that you are the President of City Council, you are a de facto member of the African-American Chamber of Congress. You are entitled to all the rights and privileges any other dues-paying member. And, as such, we would ask you to use your privilege to request all the information from the Chamber that we ask.

Thank you very much. In your testimony you say you are not allowed to participate in the Emerging Contractor Program as administered by the African-American Chamber of Commerce. Is that because it is a training program?

Well, Madam Chair, that's a very good question.

That is what we are led to believe, that it is a training program. Is that why you are not able to participate? 470 RESOLUTION NO. 040095 - 3/29/04

Well, that's a very good question, as I said. The history is, when this program initially was -- when inception of this program, really came about on the heels of all our activism out in the street. We had protested the Constitution Center, the Liberty Bell, we have shut down numerous jobs, Rite Aid, CVS, numerous jobs, the SEPTA El project. So at the inception of the program, there was no -- there was the Contractors Roundtable Committee, which was a group that had been formed outside of the Chamber, but only came into the Chamber because at the time our group, through one of our consultants, Tony Lewis, had written a grant for the Chamber, for the Commerce Department. And the grant was roughly maybe 300,000, 150,000 a year for supportive services to outreach for disadvantaged contractors. We put in a grant, and we were told that we couldn't receive the grant because we 471 RESOLUTION NO. 040095 - 3/29/04 weren't a filed 1C-3 at that time, and the grant would be administered by the Chamber of Commerce. As it worked out, we never received any funding, any reports of the funding; however, we noticed that then they came up with a concept of the Tag Center and Emerging Contractors Program, unbeknownst to any of us. And we were told that we were a part of it, that we were behind it. But when we really looked at the practices of them, we weren't a part. So throughout the year we just continued to try to keep our affiliation with the Chamber. And we continued to ask for reports, and we continued to ask for accountability. A period of two years passed, no 20 accountability. We asked some other questions about the employment practices of the Tag Center. We noticed that mostly everybody that was being a -- a majority of people that were being selected for employment with the 472 RESOLUTION NO. 040095 - 3/29/04 Tag Center, the first, the director of the Tag, was Bruce Carley's brother-in-law. Another member was Anthony Fuller's wife. Somebody else was connected with Jerry Valerie. Jerry Valerie was selected as -- even though he was a program developer, his company was selected -- the Emerging Contractors had to deal exclusively with his company for bonding and insurance. So just as businessmen, we all want to be involved in lawfully helping one another. We are not trying to encourage anybody to break the law. All we are asking people to do is give us a chance and obey the rules. So after we started asking questions about some accountability issues over some funding that we personally owned, with the director, the director of the Chamber's committee at the time jumped up, quit, and resigned. And two days later we were notified by letter, by the Chamber President, that we, our committee, was dissolved because of the 473 RESOLUTION NO. 040095 - 3/29/04 Chamber President quitting, even though we are all members of the Chamber and dues paying. But we were put in that position to be left. And we were told that we would no 6 longer receive administrative services that we needed for our organization. But because our organization were established contractors, we answered that challenge. We organized ourselves. Got our 501(c)(6) status, at least started that process, and we continued our organization mission that we had originally came into being with over 2003. So the answer to your question, Council President, is the reason why -- we really don't know the reason why we were excluded; we just know the reality that we were excluded.

Thank you. Ms. Smith, I think I asked you last week about the reporting and why we had not received any reports. I think, for the record, I am going to ask Mr. McPherson to please read the part 474 RESOLUTION NO. 040095 - 3/29/04 of the ordinance which very clearly spells out the responsibility of NTI reporting to us. You could sit at Councilman O'Neill's desk. MR. McPHERSON: I quote, Over the initial five-year period of the NTI, the City of Philadelphia, through its departments and agencies, will prepare monthly reports and updates of employment and contract activities for NTI which summarize the following: Utilization of MWDS, DBEs, and commitments made with such businesses; the hiring and employment of minorities and females; the training programs utilized and the placement rates. Additionally, the City of Philadelphia acknowledges the value of project monitoring and, therefore, will develop and work with an oversight committee to monitor all overall compliance and achievement of the project objectives as defined in this economic opportunity plan. The City of Philadelphia agrees to keep and require all prime contractors and consultants to keep such records and to file 25 such reports relating to the provisions of 475 RESOLUTION NO. 040095 - 3/29/04 this economic opportunity plan as may be reasonably necessary to document compliance with the plan. The City of Philadelphia, through the Mayor's Office of NTI, has contracted and is actively working with the Greater Philadelphia Urban Affairs Coalition to assist in the monitoring and reporting of its performance with respects of this plan. The GPUAC shall work with the city, its departments and agencies, contractors, consultants, and training providers to ensure maximum opportunities not necessarily identified in this plan. The City of Philadelphia, through its departments and agencies, agrees to work with all contractors to submit to the GPUAC manpower utilization projections for all work associated with this initiative. And, again, there are other reporting requirements stated throughout the ordinance.

We do have reports on file from both GPUC as to -- 476 RESOLUTION NO. 040095 - 3/29/04

Are you keeping that a secret or are you willing to share it?

We are willing to share it. Attached to the letter I gave you is a summary of the two reports for everything. But I will go back and get all of the -- and we have been getting them on a quarterly basis, that's the way from a capacity standpoint we have been able to manage. But then I will give you all the backup documentation. But I did attach to the letter the summary numbers.

Starting from today forward --

Yes, I will.

-- would you please make certain that Council Members get a copy of that report.

Yes, I will. And I was just going to add that MBEC monitors the contracting side of the MBE/WBE. 477 RESOLUTION NO. 040095 - 3/29/04

Have you filed any of the reports with the Chief Clerk's Office?

No, not with the Chief Clerk's Office. I will do that.

That is part of the ordinance, also.

And I will also make copies of the reports that we received from the African-American Chamber of Commerce on the Emerging Contractors Program.

And I would suggest, so that we don't have to do this every time we have a Public Hearing, I think it is more than just the reports that you are referring to. I would like you to sit with Charlie McPherson so that he could go over what reports you are supposed to be submitting.

One of the things that I did after the hearing last week is, I put in a request to the law department to review the legislation and to make a checklist for me of all the variety of reports that are required. I know we had been including some 478 RESOLUTION NO. 040095 - 3/29/04 information in our quarterly reports to Council, but then other bits of information have not been. So I am working on a system to rectify that.

The Chair recognizes Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam President. But if Mr. Cruz has a statement, I would hold my questions until he is finished.

Shall we listen to the panel, and then we could ask the questions. All right. Who is going to speak next?

I will, Madam President.

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

Good afternoon, Council President Verna and Council Members. My name is Luis Cruz. I am a Hispanic general contractor and the president of the Hispanic Chamber of Commercial of Philadelphia. 479 RESOLUTION NO. 040095 - 3/29/04 I have a problem with several things here today. And one of them is the $700,000 that is going to be given to the Minority Business Enterprise Council and also the million dollars that is also going to be given to the Emerging Contractors. Because, if anything, the Hispanic Chamber of Commerce is not included in representation at the Minority Business Enterprise Council. Up to presently we haven't had a representative of the Hispanic community as part of MBEC. And, as well as the Emerging Contractors, we haven't been included in that. We also have many contractors in the City of Philadelphia. Although I have been a founder and a member of the African-American Chamber and Contractors Roundtable, we were never included in the structure of this Emerging Contractors. As well as the MBEC, we have been a member for over ten years, yet our advocacy for getting representation of the Latino community as one of their directors or some 480 RESOLUTION NO. 040095 - 3/29/04 staff hasn't been included. This is a problem. Our community is growing at a very rapid pace, our business community is growing at a very rapid pace, but yet funds are being put out that doesn't include our community. I think that the African-American and the Hispanic community have a lot in common. But sometimes, because of individuals, we don't get likely included. I know there is a lot of Council Members that believe in what I have just said; that, you know, we have synergies. But sometimes people don't remember that. I would like to just make a brief description of what happens with our established contractors. About three years ago there was a strong push for participation for established minority contractors in the city to participate down at the stadiums. Me and several others were included to get opportunities down there, but a lot weren't given those opportunities. 481 RESOLUTION NO. 040095 - 3/29/04 We went down, we participated, we tried to bring in some of our other established minority contractors. At the Phillies, even less -- as time went on, even less got opportunities. The problem in our city right now is, we have a pool of established for real, for real contractors, you know, not brokers. I am talking about established minority contractors that meet opportunities, some of which are with me here today. And that's where the Contractors Roundtable came from. We were real contractors who wanted to get out so we could be able to get our voice heard, get our statement out to the street. But what happened was, you know, it evolved into a programmatic system. And we need to be able to help the established contractors so they could be able to build themselves up, as well as contractors coming in. But established contractors are disappearing because of lack of opportunities, 482 RESOLUTION NO. 040095 - 3/29/04 lack of support. You know, the people that I employ are losing their jobs. The people that they employ are losing their jobs. How could we bring in new contractors to become contractors, if the opportunities aren't interest for the established contractors? Everybody is looking for a way to not include minority contractors. Those of us who have all the requirements aren't getting the opportunities. How are the ones that are coming in going to get the opportunities?

Mr. Cruz, I guess I am losing you to some degree. Have you ever bid for any of this work?

For the NTI work, we bid one of the initial packages and we were unsuccessful. And the numbers just were unrealistic. We didn't bid anymore and we lost getting information on it, put it that way.

Why wouldn't you bid again? Just because you may not have been 483 RESOLUTION NO. 040095 - 3/29/04 the lowest bidder at one time --

What we did is, we followed up with keeping track on them, but the numbers were unrealistic. But I am not just talking about --

The Chair recognizes Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam President. Can Mr. Cruz explain, when you say the numbers were unrealistic or -- are you suggesting that the bid that you submitted and the bid that was eventually awarded, the numbers being for the contractor who got the award, you just couldn't figure out how they could do it for that kind of price? Is that --

Absolutely. COUNCILMAN DiCICCO: I think I know where you are going, but I think you need to explain that. Because at the end of the day, I don't know in this particular case, but at the end of the day it actually may even cost us 484 RESOLUTION NO. 040095 - 3/29/04 more money because sometimes contractors will come in with a low number. And then we get the overruns and the extras that are added in later on, which ultimately brings the number at the end of the contract to either equal to what was disqualified or sometimes, in many cases, even over what the contract was. So I think you need to try to explain that in layman's terms as best you can.

And thank you, Councilman, because that is the root of the problem. The initial contracts, the houses were going between 6 and 8 thousand dollars a house. Now, the demolition, yes. Now, we are a union contractor. Okay? Because that's the only way you get an opportunity in the City of Philadelphia, is by being a trades person. How can I pay union wages, if it costs me more -- in other words, real easy breakdown. You are taking down one of these houses, two- to three-story house, you would 485 RESOLUTION NO. 040095 - 3/29/04 use four to five dumpsters. If the dumpsters are costing you $600 apiece, that's $3,000. You bring a machine in, machine costs you about $1,000 a day. It takes you two days, that's $2,000. You got, let's say, three laborers. Laborers cost you, with packages, about 350, 400 dollars a day. I just went bankrupt, you know, and I didn't make no money. That's not including any of my overhead, that's not including insurances, that's not including the costs of my bonds. I don't know how these guys were doing it. I mean, you know, and I'm not about to, you know, go into somebody else's business. But that's why we pulled away from -- the numbers now, yes, the numbers look a lot better now. We were second in one of the packages, as my colleague said. We were the second bidder for the package that just came out. So the numbers have gotten better because they are more realistic now. Okay? But the initial packages were 486 RESOLUTION NO. 040095 - 3/29/04 unrealistic. They were coming into the city, outside contractors from outside the city were coming in, and then they were brokering it to smaller contractors and making them do it for unrealistic numbers. I hope I answered your question, Councilman. COUNCILMAN DiCICCO: I think I know where you are going, but maybe because I am a little familiar with construction. You go in and you made a bid on a particular job. Your numbers were higher than the competing bid. So, obviously, you don't get the job. The competing bid comes in. Do you know of any instances where that competitor, who out-bid you initially, ultimately had some overages, additional charges, which brought the numbers to either within the number that you originally bid or over that? I think if you know of any cases like that, that would be helpful to this committee.

Unfortunately, I do not. 487 RESOLUTION NO. 040095 - 3/29/04 I wish I did, but I do not.

I think Ms. Smith would like to respond, Councilman.

Thank you. Councilman DiCicco, one of the things I really feel very proud about is, once we have awarded the contract, there have been very few change order or overruns. The only changes we make in contracts, as those of us who have worked on a program, sometimes we have taken properties off the list, then we deduct -- the cost of that property comes out of the contract and the contractor does not get paid for it. A deduct may happen because the owner may step forward, you know, says, you know -- and pull building permits to do the repair. For those of us that have been involved on the target program, that's what's happening. And I can also have Mr. Solvibile provide information on emergency curb-side. He has been called away. I mean, I think one of the things 488 RESOLUTION NO. 040095 - 3/29/04 this testimony does demonstrate is, you know, this cost, you know, some feel that is it enough to cover the cost of doing business. I mean, that, you know, and others feel that we were paying too much. But, no, we are not awarding contracts and then letting people change those numbers after contract award. COUNCILMAN DiCICCO: Thank you.

Ms. Smith, why don't you stay there, please. COUNCILMAN DiCICCO: Because I had a followup, but I will yield to Councilwoman Blackwell.

Thank you, Councilman DiCicco. I don't know what the figures say, but I would venture to say that Redball in my community, in Mantua, did in fact create the kind of situation that Councilman DiCicco called for. I am sure they must have had cost overruns. I mean, at every meeting I attend, I mean every single meeting as recently as 489 RESOLUTION NO. 040095 - 3/29/04 Friday, I talk about these contractors, Madam President, and that they need to be included. I know, for example, that we had a company on a contract in my district who said they didn't want to be in Philadelphia, didn't want to work in Mantua, and they are in my district and they were in North Philly in Strawberry Mansion in Councilman Clarke's issue. And they must have one crane, and they just move it from community to another and drag out a process. Since NTI, they have been in my community for about two years and still haven't finished. So, you know, it doesn't make sense that -- I mean, I am telling you, Madam President, every time we have a meeting as recently as Friday, I am asking about these contractors. And everybody keeps telling me they are on the list, we are in communication with them. I mentioned them to Pat Smith on Friday, you know, that they are saying they are not getting work and they are supposed to 490 RESOLUTION NO. 040095 - 3/29/04 be on the list and they are supposed to be getting contracts. But, if I understand correctly, Mr. Cruz is saying that if you give them one or two or three properties, it is not even worth it, he still can't make it. You know, and your question was, if I might, your question was valid in terms of the training program versus the emergency contractors because we are losing it. When I had a meeting with Mr. Crawley, whom I wish was here, on this very issue, he told me they are doing fine, that people like Jhiad Ali, Mr. Cruz, and the others at the table bid on regular contracts and they are getting all the work. And that they would -- you know, they are trained, and then they can get work, and everything is moving along fine. And that those who are actually in the training program are able to bid on smaller numbers of properties, a handful, depending on the project. And I know we have had problems with 491 RESOLUTION NO. 040095 - 3/29/04 MBEC, we know that. But obviously we owe these gentlemen a great deal of gratitude because Mr. McPherson read the rule. We don't get the reports. And it is apparent to me that they are not getting the work. I am embarrassed. One of the reasons why I have this amendment that I want to introduce is because of problems like this. We have contractors who live and work in our city, they are part of our city, they raise families in our city, and they still can't get the jobs. And I really would like us, I agree with Mr. Jhiad Ali who said we need to hold up until we get some answers and find out how we move forward in an orderly fashion so that people who live and work in their own city can be included in the jobs that are let here. (Applause.)

Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam President.

Thank you. 492 RESOLUTION NO. 040095 - 3/29/04 COUNCILMAN DiCICCO: Ms. Smith, in response to my question, you said that when a contract is awarded, these contractors are held to the actual bid, basically, to the actual bid --

What they bid. Plus we even make the contractor for what you call add-ons -- such as, for example, suppose we don't know, because we are unable to get access to every property, how much it will cost to do the asbestos removal. So we do, like, a linear foot. COUNCILMAN DiCICCO: I understand that circumstances arise that you can't predict when you do the original bid.

But they are locked into their linear costs. Right. COUNCILMAN DiCICCO: When these gentlemen were making these bids early on, what was the cost of demolition you were estimating there?

In the first year of the program, which was FY '03, and this was the contractor that -- and it was just last year 493 RESOLUTION NO. 040095 - 3/29/04 was awarded, one contractor came in, some people in the industry would call them a maverick bidder. They came in very low. But they were held to that cost. Their contract anticipated, I believe, a nine-month demolition process because there was more than a hundred properties in that. It was slow getting off the ground for a variety of reasons, including the necessary need to go into court, as Councilwoman Blackwell will remember. That contract is practically complete. I do believe some of the post-demolition treatments have been a little slow because of the capacity of one of the subs. And they are moving to wrap that contract up. That person has not bid in the City of Philadelphia, and said they would not bid in the City of Philadelphia, anymore. So they have really been off the table. COUNCILMAN DiCICCO: My question is, well, when the NTI program originally 494 RESOLUTION NO. 040095 - 3/29/04 started -- and I think we had some of this last week, but I would like it again for the record -- what were we paying on average to demolish a property?

Again, if we use the first three bids, for example, I can get that number for you. But it would be based on Strawberry Mansion and Mantua, which were lower than what they are today. COUNCILMAN DiCICCO: Give me a number. 6,000, 8,000 per unit, something like that?

I think they have some numbers here for me. The top three, which Redball bid on, it was one was at eight, that was in Strawberry Mansion. COUNCILMAN DiCICCO: 8,000?

Yes. Ten, which was Frankford. And then Mantua was ten. But they have not bid it since then for a variety of reasons. COUNCILMAN DiCICCO: Because, apparently, they couldn't do the job at those 495 RESOLUTION NO. 040095 - 3/29/04 rates.

Well, it was a lot of reasons going into that. I don't -- but the reasons that were stated to the Administration was not because they couldn't do the job at that rate, but because of the community issues that arose around the Mantua demolition project and the animosity that was, you know, generated by that. So they said, they told me specifically, that was why they were not going to continue to bid in the city. COUNCILMAN DiCICCO: When Mr. Cruz and Mr. Ali testified, Mr. Cruz, I think, testified that when they were bidding on jobs, the bids were expected to come in somewhere between 6 and 8 thousand dollars.

I don't recall that. I mean, what we do, cost estimates are internal. And then it is what is bidded when we publicly advertise it. I mean, what we have done in terms of outreach, we fax notice of opportunities. 496 RESOLUTION NO. 040095 - 3/29/04 We have even in the last six months had evening contractor outreach meetings, which I believe everyone has attended. I mean, we have done an active outreach to let people know when we are bidding the projects. COUNCILMAN DiCICCO: I am normally not one to interrupt someone answering. I appreciate all your comments, but I am trying to get a little bit more specific on the value of the bids when these gentlemen and their contractors were out there bidding, and compare it to what we're paying today for the same type of work, which apparently -- and through testimony last week and the week before -- has greatly increased. So I am concerned about if these contractors, the roundtable guys, were out there bidding, and they were coming in -- I don't know what their numbers were. I am going to say they were coming in at 10, just for the sake of by way of example, and another contractor was coming in at 6 and 8, obviously it is going to go to the lowest responsible 497 RESOLUTION NO. 040095 - 3/29/04 bidder. Since then their numbers, the people who are here today, seem to reflect more of what we are paying today than what was expected then. People were getting knocked out, were not being considered for contracts because they couldn't compete. And my question is, where are they in the world of competition today? Were not the numbers that they were coming in at a year or a year and a half ago coming in compared to the numbers we are paying today?

Councilman DiCicco, if they had bidded on subsequent things, they would have been as competitive as other bidders. To my knowledge, we did not receive any bids. I'm not sure which of these bid packages Mr. Cruz or the other contractors bid on. But subsequent to that -- and I know I have had a number of conversations with Mr. Cruz -- we were going to have some followup 498 RESOLUTION NO. 040095 - 3/29/04 meetings. Unfortunately, he was not able to attend. But the fact of the matter, all bids are -- when they are open, the numbers are read, that's a public process that you know what the numbers came in at. So people would have known that they were increasing because the industry numbers were moving up. We also continued to work, we made more than, I think, a number of offers to sit down, talk with people about the process and the bid process over, you know, the last -- I mean, the last few months, even, letting people know what bids were coming. We started the small package program so that people could participate in that. We sent out fax broadcasts, if we have your address. I know Mr. Cruz was one because I gave his information in to receive fax broadcasts of bidding opportunities. COUNCILMAN DiCICCO: I have a couple more questions, and my questions are now to Mr. Cruz and Mr. Ali. 499 RESOLUTION NO. 040095 - 3/29/04 How many members, contractors, are a part of the roundtable? Approximately, if you don't have an exact number.

I don't have the specific number.

What was that question? COUNCILMAN DiCICCO: How many contractors are members of the roundtable?

We have 35 members that are mostly unionized contractors. COUNCILMAN DiCICCO: Unionized contractors. How many of them are Philadelphia-based contractors?

I would say out of the 35, maybe 90 percent are Philly based. COUNCILMAN DiCICCO: So 27 or so, high 20's?

Yes. COUNCILMAN DiCICCO: And these are union member contractors?

Majority of them are all union, except for Mr. Jamal, he is not union. Maybe five are not union contractors. 500 RESOLUTION NO. 040095 - 3/29/04 COUNCILMAN DiCICCO: Is the opportunity there or do these contractors participate in the apprenticeship program for their employees?

Yes. We wholeheartedly support the apprentice program as it is being put forward by DAP, Diversified Apprentice Program, which is a subsidiary of the prep organization, which is being funded indirectly by Local 332. COUNCILMAN DiCICCO: Do you know how many of those employees that are in the apprenticeship program or have been in the apprenticeship program have made it to journeyman?

So far the numbers haven't come in yet, because it is a five-year cycle, mainly, we are talking about with the journeyman. But what I can tell you, Ms. Smith testified earlier, that there were 36 apprentices that were funded by the DAP Program. But what Ms. Smith didn't tell you 501 RESOLUTION NO. 040095 - 3/29/04 was that five of those apprentices were members -- were actually the ones taken out of the NTI program. It is disingenuous to say that 36 came in under the NTI program, when in reality it was only 5. And when we speak about in terms of employment hours, with contractors and apprentices, if we take those 36 and just assume -- COUNCILMAN DiCICCO: You are speaking of 36 individuals?

36 individuals. Because, really, when you look at the apprentice printout, that has an uphill fight with the building trades to increase that number. But we did have a commitment from all the building trades that they were going to put a hundred apprentices in this year. COUNCILMAN DiCICCO: I remember they had a press conference to that effect about a year ago.

Yes. COUNCILMAN DiCICCO: Have they 502 RESOLUTION NO. 040095 - 3/29/04 reached that goal yet?

No. They are far short of that goal. In fact, they are only at 56. And the time limit ends next month. COUNCILMAN DiCICCO: So we are at 56 from the hundred that they promised a year ago. And the 36 have been in from the beginning of NTI?

Theoretically, yes. COUNCILMAN DiCICCO: Could you estimate --

Actually, I am sorry, Councilman, not from the beginning of NTI; from this year. COUNCILMAN DiCICCO: Can you estimate the number of people who may be working out there in the NTI program, the number of employees citywide?

I can do just -- I can look at it. We have looked at it. If we look at it in terms of just looking at some of the recent comments that were made by Mr. Gillespie of the building trades, there are 73,000 building trades people across the city, 503 RESOLUTION NO. 040095 - 3/29/04 black, white, and Hispanic. Of that, there are -- COUNCILMAN DiCICCO: That's roughly 73,000 who work in the city.

Who work in the city. That's excluding the ones that come in that have jurisdictional agreements with some of the trades. And of that number, that means that's 151 million 840 man-hours that are being worked in this city. In terms of African-American and Hispanics, if we just assume that all the labor unions, the 332, 57, and all of those, are all African-Americans, which we know they aren't, but just -- COUNCILMAN DiCICCO: They are primarily minority employees.

Yes. Then we would say we are receiving only 8 million man-hours a year versus the market being 151 million man-hours. So we certainly have an uphill fight. But the issue is, it is, I think, Governor Schwartz just had a comment that 70 504 RESOLUTION NO. 040095 - 3/29/04 percent of all existing businesses make opportunities for new employees. So even looking at the apprentice thing and this NTI, it would make better sense to help support existing businesses, so we could increase, ultimately increase, that apprentice ratio. COUNCILMAN DiCICCO: I certainly agree. And that's where I was kind of going with my questioning. Is that when you look at the number, 75,000 or so employees who are in the building trades, who from time to time work throughout the city, and you wind up with 56 that was promised last year in the apprentice program, you are less than a hundred no matter what you look at. That's a very dismal number. It is a very insulting number, I think, in the scheme of things. But probably I think that I would be accurate if I was taking a guess that the majority of these apprentices are Philadelphia employees; citizens, residents of the City of Philadelphia. 505 RESOLUTION NO. 040095 - 3/29/04

Yes, that probably supports that. COUNCILMAN DiCICCO: Thank you, Madam President. I have no further questions.

I would just like to remind everyone that we do have a scheduled 1 o'clock Public Hearing. We still have a number of witnesses who would like to be heard. So I would ask everyone to please try to be as brief as possible with their questioning so that the people who were here for the 1 o'clock meeting will not have to stay too long. At this time the Chair recognizes Councilwoman Brown.

Thank you, Madam President. And I will certainly honor that request. Pat Smith indicated in her testimony that at some juncture, per your instruction, we will get the reports that speak to minority and female participation. My question to Pat Smith is, on RESOLUTION NO. 040095 - 3/29/04 of the five-year plan, it states -- and I will quote -- under the section Building Opportunities For Disadvantaged Businesses, that of the 25.5 million in demolition contracts since January '03, minority firms have provided 40 percent and female firms have provided percent of the work. My question is, the gentlemen before us, if they have not had the opportunity to be a part of these numbers as cited in the document?

Those numbers represent 14 subcontractors to the prime contractors. 15 One of the things when we first came 16 aboard and was putting together what we call 17 the planned demolition program, the targeted 18 program, one of the complaints we heard from the minority contracting community was that by letting just demolition contracts, letting just single stucco contracts, just letting asbestos contracts one by one, that a lot of times people didn't have opportunity to bid on those, what they call, requirement contracts, the way L & I had done it before. 507 RESOLUTION NO. 040095 - 3/29/04 So one of the changes we made was to come up with a GC model so that the GC would be required to subcontract some portion of the work in order to meet the goals that we were setting. And as a result of that, the GC's, or the prime, tend to subcontract out things like the stucco work, they tend to subcontract out the environmental work that Mr. Solvibile talked about. When I break out and make available to you the list of those who have been getting the subcontract awards, they tend to be environmental folk, they tend to be stucco plastering individuals, companies, and in the third area are individuals. There are some contractors that specialize in hand demolition, as opposed to the machine demolition. And in some instances some of the hauling might get subcontracted or the seeding of the lot, which was a new requirement, may get subcontracted. So we did that so that we can 508 RESOLUTION NO. 040095 - 3/29/04 increase the number of subcontracting opportunities. And that's why we were able to increase the participation of subcontracting. Having done that, then the concern was raised, at the same time we continued to try to reach out, we hold meetings in neighborhoods and provide information on bidding on NTI projects in general, but then the question came to us, well, it's not just enough to create opportunities for subcontractors; we need to work and create more opportunities for prime contractors. And that's when we received the proposal about the Emerging Contractors Program. I believe at that time the Contractor Table, Roundtable, was a part of that. In fact, that's the way I always understood it. I didn't realize that there had been this change. And then the other thing is, the other issue that has come up -- and, granted, we didn't do all these things from day one -- but the other thing that we did is the sizing of the package. We did have smaller packages. 509 RESOLUTION NO. 040095 - 3/29/04 For example, I think the Frankford package was around 26. We did have some 4 and 10 packages in some other parts of the 5 city. 6 But we are making a concerted effort 7 to put out smaller bid packages, which might 8 be more appropriate in size for the minority 9 contracting community. 10 And we continue to do outreach, you 11 know. If anyone expresses interest, walking them through the prequalification forms. There is a lot of paperwork, we all admit, that needs to be submitted as part of the process.

I would just like to respond to that. One thing, I really don't think, Ms. Smith -- and I really don't want to you take this personally -- I think that Ms. Smith really has an interest to do the right thing. I just think that she has been misled. When she just made mention that, at the time that we were a part of the roundtable, now we were told that -- we were 510 RESOLUTION NO. 040095 - 3/29/04 never informed that the NTI people, Ms. Smith and others, were considering creating an opportunity for a training program. That information was kept from us, me as a member and I am sure Mr. Cruz, who is the Chairman of the Hispanic Chamber. So, you know, it is disingenuous to say that we were a part of that process. We might have been physically in this world, but we weren't informed. And if you are not informed, how can you honestly say that we were a part of something? But that wouldn't be Ms. Smith's responsibility. The responsibility that Ms. Smith should have is to make sure that her process -- this isn't my first time seeing Ms. Smith or my first time being in Council. But her responsibility is to ensure that whatever program that she is advocating, to ensure that that is being inclusive across the board, and that she is not being misled by somebody who was trying to push for their own personal agenda. I think we owe that responsibility 511 RESOLUTION NO. 040095 - 3/29/04 to all the citizens of Philadelphia, and she certainly owes it to City Council. Because City Council, all you members sitting here, you are the ones that the voters elect. And when we go out on those picket lines, those citizens, your voters, come and they stand on those picket lines with us, and they look to you as the reason why we are out there. They don't know anything about the Chamber, anything about Anthony Fuller, anything about Ms. Smith. They know, hey, look, this job is going down, it is a city-funded job, we are not included, what's the reason.

So for clarity purposes, Ms. Smith, the documents that we will get the next round will show the distinction between subcontracting opportunities and what the numbers are and what the facts are around GC's; correct?

Yes. The spreadsheet shows the prime contractor, the amount of the contract that was awarded, and then it breaks 512 RESOLUTION NO. 040095 - 3/29/04 out by subcontract the name and the amount of the subcontract award, the amount that was -- that we have documentation for, as well as the commitment amount. That is the standard MBEC report that we have been getting.