COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE COMMITTEE ON FINANCE - - - Room 696, City Hall Philadelphia, Pennsylvania Tuesday, 6/4/02 11:00 a.m. - - - BILL 020075 BILL 020338 BILL 020355 BILL 020340 BILL 020348 BILL O20361 BILL 020275 RESOLUTION 020285 (Titles of the bills contained within transcript.) PRESENT: COUNCILWOMAN JANNIE BLACKWELL, Chair COUNCILWOMAN MARIAN B. TASCO, Vice Chair COUNCILMAN DARRELL CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK DICICCO COUNCILMAN JAMES F. KENNEY COUNCILMAN MICHAEL A. NUTTER COUNCILMAN BRIAN A. O'NEILL - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 I N D E X BILLS 020340, 020361 PAGE DONALD A. CRAMP, Hospital and Higher Education Authority .............. THOMAS TODOROW, CHOP .................... AUSTIN McGREAL, ESQ., CHOP .............. BILLS 020338, 020355 ROBERT FINA, PIDC, PAID ................. BILLS 020075, 020348 CRAIG WHITE, PGW ........................ JOSEPH BOGDONAVAGE, PGW ................. SAMUEL SPEAK, ESQ., Local 686 ........... 28 JOHN NIXON, ESQ., PGW ................... 31 ABBY PZEFSKI, ESQ., PGW ................. 33 PAUL MONDIMORE .......................... 42 BILL 020275, RES. 020285 STEVE CULBERTSON, Frankford CDC ......... 51 SHIRLEY RANDELMAN, Cedar Park West CDC .. 55 PATRICIA SMITH, NTI ..................... 56 VICTORIA MASON AILEY, Philadelphia City Planning Commission .............. 76 MJENZI TRAYLOR, Commerce ................. 79 DEBORAH MCCOLLOCH, Director of Housing .. 116 DAINETTE MINTZ, OHCD ...................... 129 ANTHONY LEWIS, Housing Association of Delaware Valley .................. 144 JUDITH ROBINSON ......................... 147 3 6/4/02 - FINANCE - BILLS 020340, 020361
Good morning. Thank you, everyone, for your patience. Since we have a long agenda and many bills in varied areas, certainly, we want to call into session of Finance Committee hearing. The clerk will read title of Bill No. -- maybe we'll read the first two bills together. Bill Nos 020340, a CHOP bond ordinance, and 020361 Temple bond ordinance. Would the clerk please read title of those bills.
Bill No. 020340, an ordinance declaring that it is desirable for the health, safety, and welfare of the people in the area served by the Children's Hospital of Philadelphia, of the Children's Hospital Foundation, and children's Seashore House of the Children's Hospital of Philadelphia, for Hospitals and Education Facilities Authority of Philadelphia to participate with such institutions in certain renovation, improvement, and expansion projects to such institutions, buildings, and facilities primarily at their campus located at 34th Street and Civic Center Boulevard. 4 6/4/02 - FINANCE - BILLS 020340, 020361 And Bill No. 020361, an ordinance 3 declaring that it is desirable for the health, safety, and welfare of the people in the area served by Temple University in the vicinity of 3401 North Broad Street, for the Hospitals and Higher Education Facilities Authority of Philadelphia to undertake a project whereby the Authority will finance the cost of the development and construction of a multi-level ambulatory health care buildings and other hospital improvements and related costs.
Thank you very much. Mr. Donald Cramp and whomever's testifying on these two bills, please come forward. (Witnesses come forward.)
Donald Cramp for the Hospitals and Higher Education Authority, always a pleasure, sir.
Please identify yourself for the record and proceed.
Thank you for your 5 6/4/02 - FINANCE - BILLS 020340, 020361 gracious introduction, Madam Chairperson.
If I may, I would like to have a short testimony on behalf of both bills, and we are prepared to respond to either bills with the one short testimony with respect to your time this morning.
Madam Chairperson, Committee Members, my name is Donald Cramp. I do serve as the Chief Executive Officer of the Hospitals and Higher Education Authority. I wish to make a brief introductory statement in support of both proposed bills before you today for Children's Hospital of Philadelphia and Temple University Hospital. The Children's hospital of Philadelphia and Temple University Hospital submitted their applications to the Hospitals and Higher Education Facilities Authority of Philadelphia seeking the Authority's assistance in financing the applications. Both applications have been accepted. The hearings are in order. THE use of the proceeds will benefit our citizens serving the citizens from both of these 6 6/4/02 - FINANCE - BILLS 020340, 020361 remarkable centers. The obligation to repay the debt rests with both institutions and not the responsibility of the City nor the Authority. Today we have the privilege together of assisting Children's Hospital of Philadelphia and Temple University Hospital and the many people associated with these exceptional organizations. To close, Madam Chairperson, I would like to express appreciation to you and to each member of the committee and of the Council on behalf of the Board of the Authority for the scheduling of these meetings before the recess. Thank you very much.
My name is Thomas Todorow, I'm the CFO at Children's Hospital of Philadelphia. And on behalf of the Children's Hospital of Philadelphia, I would like to thank the Administration and City Council for the privilege of issuing municipal securities through The Hospital Authority. As you know, CHOP and the Authority 7 6/4/02 - FINANCE - BILLS 020340, 020361 have an history of successfully partnering on these financings. The hospital's long been a part of the fabric of the West Philadelphia community. This expansion program will permit the hospital to maintain its position as one of the leaders in pediatric medical science, and more broadly, for the City to continue its outstanding reputation as a mecca of scientific and medical discovery and exceptional patient care services. The money will be used for both current refunding as well as to support our expansion program in which we are in Phase I, which includes expansion of our research capabilities and our Abramson tower along with the addition of our south tower and 50 beds. Again, thank you for your support in the furtherance of the research patient car and teaching mission of the Children's Hospital of Philadelphia. I will entertain questions at any time.
That concludes, Madam Chairperson, our testimony on that one bill. 8 6/4/02 - FINANCE - BILLS 020340, 020361
Thank you very much. When do you most likely think these deals will close?
It is a cause for our appreciation to be here before the recess because the proceeds we hope to be in the hands of both institutions during the summer months and well before reconvening in the fall. That's why we appreciate being here.
Great. And what is the anticipated debt for both projects?
The ordinance for the CHOP shows a figure of $240 million. And for Temple University, I believe the ordinance is $46 million. You may note that there will be a higher figure, if it should reach your ears, for the CHOP. It will be more than in the ordinance 20 in all likelihood but that's because of some refunding that can be done with a renewal. But the maximum that this ordinance is calling for is the $240 million.
Thank you very much. 9 6/4/02 - FINANCE - BILLS 020340, 020361 Are there any questions from members of the committee? (No further questions.)
Thank you very much. We will now proceed to the development bills, Bill Nos. 020338 and 020355. And the Chair calls on Bob Fina, Vice President of PIDC and whomever. Sir, did I miss something? MR. McGREAL: My name is Austin McGreal, I'm general counsel of the Authority. I just ask that if your Honorable Committee approves, I'd ask for a suspension of the rules on both of them.
Good morning. Good to see you. Thank you for your patience. Please identify yourself for the record. 10 6/4/02 - FINANCE - BILLS 020338, 020355
Good morning, Chairwoman Blackwell and Members of the Finance Committee. My name is Robert Fina, and I'm accompanied by two colleagues this morning. On my left is Jennifer Rodriguez.
Excuse me, Mr. Fina. I'm sorry. I forgot to get the clerk to read the title of the bill.
Bill No. 020338, an ordinance authorizing Philadelphia Authority for Industrial Development to file an application with the Office of Budget under the Capital Redevelopment Assistance Program in an aggregate amount not to exceed $40,500,000 to assist in the development of the Northeast Community Center, Please Touch Museum, Universal Commercial Center, University of Pennsylvania Cancer Treatment Center, University of Pennsylvania Veterinary School, and the 60th Street Commercial Corridor. And Bill No. 020355, an ordinance 22 dissolving the St. James Court Tax Increment Financing District, being the area generally bounded by Eighth Street on the west, Walnut Street on the north, St. James Court on the 11 6/4/02 - FINANCE - BILLS 020338, 020355 south, and Washington Square West on the east, in accordance with the Tax Increment Financing Act being the Act of July 11, 1990, as amended.
Thank you, Chairwoman. Again, my name is Robert Fina. I'm a senior vice president with and PIDC and I am here representing PIDC and the Philadelphia Authority for Industrial Development. On my left is Jennifer Rodriguez, a colleague of mine at PIDC. And on my right is Erin Murphy, a colleague of mine at PIDC. I will begin my testimony on Bill No. 17 020338. This bill will authorize the Philadelphia Authority for Industrial Development (PAID) to apply for Redevelopment Assistance Grants the Commonwealth of Pennsylvania in the aggregate of $40,500,000 for seven redevelopment assistance projects. The funds will be used to assist development of the Northeast Community Center, Please Touch Museum, Universal Commercial Center, the University of Pennsylvania Cancer 12 6/4/02 - FINANCE - BILLS 020338, 020355 Treatment Center, the University of Pennsylvania Veterinary and 60th Street commercial corridor. Bill No. 020338 would authorize PAID to enter into certain agreements with the City to apply for the state funding to enter into the grants. The agreements would be with the Commonwealth's Office of the Budget to carry out the purposes of City Council's ordinance, designate the City and or the project recipients to assume the requirement of the full match for each project, designate the City and/or the project recipients to reimburse the Commonwealth for its share of any expenditures found to be ineligible by the Office of the Budget and obligate the City and the designated project recipient to complete the projects within a mutually agreed upon time frame between the Office of the Budget and PAID, including allowances for reasonable extensions. Exhibit A of the ordinance provided with the project description for each of the seven projects seeking funding from the Commonwealth provides detailed explanation of each one, and I will not include that in my 13 6/4/02 - FINANCE - BILLS 020338, 020355 testimony. However, I will briefly identify each project, its location, the amount of state funding sought and process by which the Commonwealth accepts applications for funding. I will do this quickly, Chairwoman. The Northeast Community Center, located at Bustleton and Solly Avenues in Rawnhurst, seeks $1 million of State assistance funding. Please touch Museum, currently located at 21st Street near the Parkway, plans to locate to Penn's Landing seeks 12,500,000 of State Redevelopment Assistance. Universal Commercial Center, located on the avenue of the arts between Fitzwater and Catherine Street, seeks of 4,500,000 of State Redevelopment Assistance. The University of Pennsylvania Cancer Treatment Center located at the former Philadelphia Civic Center on Civic Center Boulevard, seeks $4 million of State Redevelopment Assistance funding. The University of Pennsylvania Veterinary School, located at 38 Street and 14 6/4/02 - FINANCE - BILLS 020338, 020355 Woodland Avenue, seeks $18 million of Redevelopment assistance funding. And finally, 60th Street Commercial Corridor between Arch and Catharine Street seeks $500,000 of State Redevelopment Assistance funding. To apply for State Redevelopment Assistance funding, three principal actions must occur: First, the Commonwealth's House of Representatives and Senate must have included the project by name and amount in the State Capital Funding Budget that they approve. Second, the Commonwealth's Office of the Budget or the Governor's Office must in writing authorize PAID to submit an application to the Budget Office. And finally, of course, City Council must approve the ordinance. There must be matching funds for each grant that's awarded and several other conditions must be met that PAID follows.
It should be noted that under previous administrations in Harrisburg, Governor 15 6/4/02 - FINANCE - BILLS 020338, 020355 Casey, Governor Ridge, and now Governor Schweiker, similar requirements were imposed by the Office of the Budget for 43 previous projects in the total grant amount of $207 million of Redevelopment Assistance Funding. Those 43 projects have combined for a total project cost of approximately $1 billion within the City of Philadelphia. And I am pleased to advise that all 43 projects are completed or presently under construction or about to go under construction. I again request the Finance Committee's favorable consideration of Bill No. 14 020338 and the Rules of Council be suspended to permit the First Reading at the next regularly scheduled session of City Council. I thank you for your consideration. I will be pleased to answer any questions on this particular ordinance.
Thank you. Will you be needing a suspension of the rules on the second bill?
On both bills? 16 6/4/02 - FINANCE - BILLS 020338, 020355
Thank you. Are there any questions from Members of the Committee? (No further questions.)
I'll proceed with the seconds bill. Bill No. 020355 will dissolve the St. James Court Tax Increment Financing TIF District. The St. James Court TIF District is an area approximately one acre in Center City generally bounded by Eighth Street, Walnut Street, St. James Court, and Washington Square West. City Council created the St. James TIF by ordinance approved December 30, 1998, by Bill No. 980719. That bill would assist in financing the residential development consisting of a 33-story tower and rehabilitation of seven existing one- and two-story structures. The development would have resulted in 328 apartments and 17,000 square feet of retail space as well as a 332-space parking garage. Although approved by 17 6/4/02 - FINANCE - BILLS 020338, 020355 an ordinance for a 20-year term that would commence July 1, 1999, PIDC was limiting the term to years for two reasons: First, the analysis 5 of the project did not require 20 years when only 6 12 years; and second, this was a housing TIF at 7 the time. At that time in 1998, there was a 8 newly enacted ordinance that permitted 10-year 9 tax abatement on the conversion of office 10 buildings to residential, so we did not want to 11 provide a disadvantage for the conversion 12 developers by providing a 20-year term on a new construction. So we've limited it to twelve years. However, for numerous reasons, the project could not proceed. And at this point, however, the project is able to move forward because it's reduced its scope to 307 apartments and 307 parking spaces as well as a smaller retail component. Now, this project presently does not need a TIF, and that's why we're dissolving this TIF. The reason it does not need the TIF is that there is currently a ten-year abatement that's very comparable to what we were proposing and, of course, the size of the smaller TIF. 18 6/4/02 - FINANCE - BILLS 020338, 020355 The same law, the same law under the Commonwealth that authorizes TIFs allows the governing body that creates the TIF to dissolve the TIF if there are no bonds or TIF notes that are authorized or outstanding for that project. There were no tax increment bonds or other notes for that project. Therefore, I respectfully request your favorable consideration of Bill No. 020355 with a suspension of the rules to permit First Reading at the next regularly scheduled session of City Council. Dissolving the TIF does not require City Council to wait three weeks as imposed when you create a TIF, so you can dissolve it and not wait the three weeks as mandatorily required in the statute. Thank you for your consideration. I'll be happy to respond to any questions.
Thank you very much. The Chair notes that we do have quorum present. To my right, Councilwoman Tasco who's vice chair; to her right, Councilman Frank 19 6/4/02 - FINANCE - BILLS 020338, 020355 DiCicco; to his right, certainly Councilman Jim Kenney; we also have Councilman Angel Ortiz and Councilman Darrell Clarke who are here. Councilman Nutter also present. Thank you.
Thank you, Madam Chair. Good morning, Mr. Fina. In the St. James Court TIF, what taxes were we TIFFing, do you recall?
Yes, I do, Councilman. The TIF was only taxing -- the incremental tax would have been on real estate. There was little or no use in occupancy -- well, there is no use in occupancy on residential property and there was little or no incremental taxes from the retail that would have been created. So we're only TIFFing at the time the real-estate taxes.
Okay. At the time the project was proposed three, four years ago, I lose track of time, was the restaurant part of that plan, do you recall? 20 6/4/02 - FINANCE - BILLS 020338, 020355
I don't recall if there was a restaurant. There was 17,000 square feet. I believe a restaurant as well as a convenience store at the time.
So for all intents and purposes, if the restaurant is developed or restaurants are developed, none of the taxes that would normally be TIFed are going to happen because we're dissolving it and we'll actually benefit because they chose to take the ten-year abatement.
That's correct, Councilman. They would have advantage of a ten-year real estate abatement on only the real estate portion of the restaurant. Use and occupancy, sales tax that goes to the City will be generated and stay with the City.
Are there any other questions from Members of the Committee? (No further questions.)
Thank you 21 6/4/02 - FINANCE - BILLS 020075, 020348 very much.
The next will be PGW Bill No. 020075, the Capital Budget. Mr. Craig White and whomever is testifying for PGW, please come forward. And we will ask the clerk to read the title of the bill. (Witnesses come forward.)
Bill No. 020075, an ordinance approving the Fiscal Year 2002 Capital Budget, providing for expenditures for the capital purposes of the Philadelphia Gas Works, including the supplying of funds to be obtained in connection therewith and rejecting the forecast for Fiscal Years 2003 through 2007.
Also, would you read the title of Bill No. 020348, also a PGW pension adjustment.
Bill No. 020348, an ordinance amending AND restating the ordinance 23 approved July 12, 1968, as last amended effective January 1, 1999, relating to pension benefits for employees working on behalf of Philadelphia Gas 22 6/4/02 - FINANCE - BILLS 020075, 020348 Works by revising the Philadelphia Gas Works Pension Plan to incorporate amendments thereto, clarify the operation thereof, and add certain provisions as required by the Internal Revenue Code of 1986, as amended.
Thank you very much. Good morning. Please identify yourself for the record and begin your testimony. Thank you.
Good morning. My name is Craig White, I am the Acting Chief Operating Officer at Philadelphia Gas Works. And to my right is...
Good morning, Madam Chairwoman and Members of City Council. I'm Joseph Bogdonavage, Senior Vice President of Finance for the Gas Works, and I will be presenting some testimony on the pension ordinance.
Good morning. PGW has submitted written testimony. I have submitted written testimony. I am not at this time going to read that into the record; however, with the 23 6/4/02 - FINANCE - BILLS 020075, 020348 approval of the Chair, I would like to make a few brief comments. PGW staff is here and available to accept any questions or to field any questions you may have.
Thank you. With respect to the testimony that was filed, it was for the Philadelphia Gas Works 2002 Capital Budget. The total dollars being requested for authorization is for $54.8 million. One point that is of significant value and interest is the fact that 91 percent of this budget is for the core business of Philadelphia Gas Works. That means that essentially, those dollars would be spent in the areas of distribution, field services, and our gas processing plants. A very small amount of about 8 percent is available for new business initiatives and as well as for some changes to our Website and our billing system to accommodate deregulation and the unbundling of services. In addition, I wanted to make the Council aware of the fact that we have filed for 24 6/4/02 - FINANCE - BILLS 020075, 020348 an amendment to this budget. On April 29th, we submitted a filing to the Philadelphia Gas Commission and it is currently under the review the Philadelphia Gas Commission. That amendment is for approximately $5.6 million and it addresses modifications to our LNG plant, the new plant that we are building, automatic meter reading, our distribution system, and finally a million dollars for security-related issues. It is our expectation that if approved by the Philadelphia Gas Commission and recommended to Council, that Council would be asked to address this in the fall. Finally, I would ask that the Chair suspend the Rules and allow the bill to move expeditiously. That concludes my remarks and we are available to take whatever questions you have.
Thank you. Are there any questions from Members of the Committee regarding this bill? (No further questions.)
Thank you very much. You want to testify on the pension bill? 25 6/4/02 - FINANCE - BILLS 020075, 020348
As I stated previously, my name is Joseph Bogdonavage. I'M presenting testimony on PGW's new pension ordinance. Today I'm here to give you a brief summary of changes that we are proposing to the plan. There are members of PGW's staff and law department personnel available, and we'll be happy to answer any questions you might have about Bill No. 020348. I'd just like to give you an little executive summary. PGW's pension plan was established in its current form pursuant to an ordinance 480 dated July 12, 1968. Over the years, there have been many numerous amendments to the plan that reflected operational changes and incorporated various collective bargaining mandated changes to the pension plan. This bill 21 reflects those amendments. It adds certain additional changes and restates the plan to achieve the following goals: First, to consolidate the various ordinances which have been amended from the plan 6/4/02 - FINANCE - BILLS 020075, 020348 since 1968 into a single instrument with clearer language. Secondly, to incorporate any language changes required to bring the plan into compliance with tax qualification rules under the federal tax code. Third, to incorporate all language required to bring plan into compliance with various Federal and City laws, regulations, and programs, including City's Fair Practices Act. Fourthly, to address certain issues regarding the operation of the plan and the administration of the funds from which the benefits are being paid. And finally, to incorporate new language negotiated under the Collective Bargaining Agreement that was signed last May. It is important to note that the key features of PGW's plan, the restated plan, remained unmodified. The plan benefit calculations remain the same. Normal retirement age is 65. There is an earlier retirement program in effect for the 30 years of service and out an early retirement plan for age 55 plus 15 27 6/4/02 - FINANCE - BILLS 020075, 020348 years of service, and a special early retirement plan 55 years and years of service. 4 Survivor and disability benefits 5 remain unchanged. And the non-contributory 6 status of the plan still remains unchanged. The 7 changes to the plan are set forth in detail in 8 the remainder of pre-filed testimony. 9 If pleases the Committee, I would ask 10 that the remainder of my testimony be 11 incorporated into the record. 12 In addition, I would also ask the 13 Chair for a suspension of the rules to allow the 14 bill to move forward expeditiously. 15 And we're happy to answer any 16 questions related this. And that concludes my 17 brief remarks. 18
Are there 19 any questions from Members of the Committee? 20 (No questions.) 21
We now have 25 Mr. Samuel Spear, attorney, representing SEIU. 28 6/4/02 - FINANCE - BILLS 020075, 020348 (Witnesses come forward.)
Good morning Councilwoman and Members of City Council. My name is Samuel Spear. I represent Gas Works employees Local 686 SEIU. With me J.J. Johnson, one of the deputy trustees at Local 686. Also in the audience are three union representatives, Fred Aikens, David Burns, and Joe McGrath. And reason we want to do speak today, Councilwoman, is because until Friday, the union was unaware that this matter was pending before Council. It was about three weeks ago that we received a copy of the ordinance. There have been some discussions between the union and management. We know management has told the union that there will be no substantive changes made to the pension, and we are in the process of making sure that's the case. But what we wanted to do ask Council to do at this point, because we still have not finished those discussions or the review, is to give us a little time and it should only be a few weeks, I think, for the union to actually sit down 29 6/4/02 - FINANCE - BILLS 020075, 020348 formally with management to talk through all of this because, as Council knows, these matters are appropriate for discussion between the union and management. The union members and many of the reps are concerned and they need to be reassured that none of their benefits will be affected adversely by this. There are certain changes that we are aware of presently in this bill, including decreasing the vesting from ten years to five years, which may or may not be a good thing. Given PGW's present financial situation, we need to talk with management to make sure that is the right thing to do at this time. We also need to talk to them about whether some of the other changes that management had said is not going to change things but we need to make sure that it is really is not going to change any of the benefits, any of the employees are presently entitled to. So, again, we would propose at this point, if Council can do this, to put this off for hopefully one month and then we would be sure that this bill does what management says it's 30 6/4/02 - FINANCE - BILLS 020075, 020348 supposed to do.
Thank you very much. We have conferred with Members of the Committee and the Administration who feel that it is the will of the committee to report it out today, but certainly to meet with you within the next week and to see if we can come to some agreement. Is that satisfactory?
Thank you. Are there questions from Members of the Committee? Councilman Kenney.
Thank you, Madam Chair. Maybe someone from PGW can tell me how long this situation has existed and created the need for correction right now. I mean, how long have we been out of compliance of federal law? How long has this situation been in effect that we need to solve or cure the problem immediately? 31 6/4/02 - FINANCE - BILLS 020075, 020348 Can somebody from -- I mean, is this like a lengthy situation that we've been in or something new?
I'm sorry. Abby Pzefski, I'm the general counsel for the Gas Works. I have with me John Nixon who is our pension counsel also the City's pension counsel, and I would like to defer that question to him.
Thank you. Identify yourself for the record again, please.
My name is John Nixon, I'm a partner at Blank, Rome, Comisky & McCauley, LLP. I'M outside tax counsel to PGW for purposes of the restatement of the pension plan. We are currently of the belief that the pension plan is in compliance with all federal tax laws. However, over the course of time, the IRS has established rules by which both public and 32 6/4/02 - FINANCE - BILLS 020075, 020348 private-sector plans may be submitted to the service for a determination of their tax qualified status. With respect to public sector pension plans, those plans are required, if they request a normal determination from the IRS on their tax qualified status, to be submitted during course of the 2002 calendar year. It's a function of the fiscal year. Because PGW runs on a September 1st fiscal year, the plan technically should be submitted to the IRS before the end of August, August 2002. By comparison, the City of Philadelphia's pension retirement ordinance was submitted in February of this year.
If it is not submitted by the date, the IRS will not give a formal determination as to its tax qualified status. It is not necessary to have a formal determination by the IRS; however, you do increase the risk of the further examination from the service as to whether or not the plan actually complies with all of the applicable rules and regulations.
Who, in fact, 33 6/4/02 - FINANCE - BILLS 020075, 020348 initiated the development of this particular legislation? What was the catalyst that started it?
The catalyst that started it is that we understood that we needed to update the plan to bring it into compliance with the applicable laws and we began the pension review process sometime late last fall to make sure that we would be able to get it before Council in this session.
And does federal tax law require the reduction in the amount of time prior to tenure -- prior to vesting? I'm sorry.
So why are we moving from ten to five if the Feds don't require it?
I think it's one of the very few changes that was not dictated by either Federal or City law. Essentially, it's going to cost us about $10,000 a year, as see in the actuarial reports that were supplied to Council. PGW believes and the Administration believed that 34 6/4/02 - FINANCE - BILLS 020075, 020348 it was a good device to encourage and allow people to become employees of PGW. As you know, sometimes it's a little hard to get people to come to work at PGW and stay at work at PGW, and this was simply a device to make it a more attractive --
I don't necessarily disagree with it because I'm not aware of the dynamic is when a person makes a decision, but if you're trying to encourage to come at work for PGW for a longer period of time, if you invested at five, that's more than likely to be a catalyst for them leaving earlier than later, would it not be?
Well, the City made a similar change a couple years ago, and I think that the prevailing wisdom on this was that it was a device that would enable City or PGW to attract and keep good employees.
And the only question I would have -- and you can respond also. But the other question I would have is that the gentleman there representing SEIU indicated from their opinion this is something 35 6/4/02 - FINANCE - BILLS 020075, 020348 that normally would negotiated as a result of labor-management negotiation as opposed to our action. Is that inaccurate?
Our office was involved also with District Council 33 in 1999 when Council passed a recodification similar to this one of the City pension. And at that time, the union was in favor of it, but there was a period of negotiation. The union isn't prepared to say today that we're not in favor of this general idea either. We know that there are many things that do need to be recodified for the same reasons it was appropriate for the City pension. But you're right, Councilman, and that's the thing that bothers us, we were only first notified about this about three weeks ago and we just have not had time yet to fully negotiate.
One other thing. I'm sorry. As you also know, we had contentious long-term contract negotiations only last year in 2001 in which the collective bargaining agreement was renegotiated and there was much give and take 36 6/4/02 - FINANCE - BILLS 020075, 020348 during that process, and during that time, nothing about the pension was proposed by either side.
I mean, I'm not actuarial, but -- and I'm sure that the people you've hired to do this analysis are competent and capable, but it would seem to me from a layperson's standpoint that if allowing a person to vest and potentially take resources out of a pension fund earlier, five years earlier than they normally would be, that that would have some impact on that particular fund. Now, maybe your analysis or the actuarial analysis and the experience and the history is such that would indicate that that's not going to happen, but simply on the face of it, one would think that if I'm allowed to vest at five years as opposed to ten, the potential exists for more people drawing from that pension fund than would normally. Is that an unfair off-the-cuff analysis from layman's terms?
Frankly, that is one of the biggest fears that the members have expressed to us over the last week that we knew that this 37 6/4/02 - FINANCE - BILLS 020075, 020348 was coming up before Council, that sort of effect.
And it may be an effect, it may not be. We don't know, but that's why we need to talk about it at least a little bit.
You're welcome. Are there any other questions from Members of the Committee for PGW? Councilman Nutter?
I saw earlier, Mr. White. Is he still here? (Mr. White returns to witness table.)
Madam Chairwoman, with regard to the pension discussion that took place, it is not PGW's belief that that is part of the bargain agreement, the five-year vest provision.
Councilman 38 6/4/02 - FINANCE - BILLS 020075, 020348 Kenney, there's a response to your question. Would you repeat that, Mr. White?
Councilman, I believe counsel for the union indicated that the five-year vesting is part of the union bargaining agreement. We do not believe that's the case. So I just wanted to put that on the record. But we'll be happy to discuss it further.
You said it's not part of it or it wasn't negotiated? Was it negotiate in the last go-around?
Because the feeling was that it was not germane to the discussion?
That's correct. But we certainly will sit down with the union and speak to them about it.
Madam Chair, I think that as we've had the staff of the Gas 39 6/4/02 - FINANCE - BILLS 020075, 020348 Commission review this whole process, and certainly they would have raised red flags with me had we had serious problems with this legislation. However, in the next week, if we do feel that there are serious problems with it, we could hold it. But we do not believe, based on our analysis, that there are any serious problems with this legislation.
Certainly, I'm sure that the vice chair of this committee will let us know. And as you are free to contact us and the union's free to contact us if there are serious issues that can't be worked out during the next week. Is that fine?
All right, thank you. Councilman Nutter, did you have a question for PGW?
Yes, I did, Madam Chair. Thank you. Mr. White, let me start by first commending you for your significant level of responsiveness in a number of situations where 40 6/4/02 - FINANCE - BILLS 020075, 020348 PGW has had activity, capital improvement activity, and I'm focused on of your testimony in the distribution area. I do want to thank you for being very responsive on a number of customer-related issues and also some projects that are of a somewhat unique and special nature. In that context, when I read the testimony last evening, as PGW has done in the past, you obviously are trying to keep your mains and services and systems as up-to-date as possible, you have a regular -- I guess you call it your cast-iron activity or -- what do you call it?
Right. I need to ask you about one element. You know that we have a project going on or we're, I guess, finishing up a project in the West Philadelphia community at the moment. It's funny how projects start out for one purpose end up for another purpose. This started out as a SEPTA-related project and ended up as PGW project at the tail end. I've had a concern for some time, and 41 6/4/02 - FINANCE - BILLS 020075, 020348 we thought we had solved this situation over on 58th Street, but now I'm finding that it has expanded over into the 5700 block of Haverford Avenue. Related to the SEPTA work, apparently you decided to go into the 5700 block Haverford Avenue to do replacement main work. Are you familiar with that part of the job?
Yes, I am familiar but not as familiar as Mr. Mondimore, and Mr. Mondimore is here with us today. I'm going to ask him to join us.
If you want to bring am him up, that's fine. (Witness comes forward.)
Let me just ask a question. Generally, are the PGW mains or distribution lines in the roadway or in the footway?
The new mains are generally in the footway. 42 6/4/02 - FINANCE - BILLS 020075, 020348
My name is Paul Mondimore, I'm director of distribution in FSD. The old cast-iron mains are generally in the roadway. When we relocate, we locate to the footway.
The paving. Restoration of footway paving is cheaper than restoration of roadway paving.
So it's cheaper to break up the sidewalk, go into the footway area than it is to go into the street where, I guess, you have to go through a couple inches of asphalt and then concrete base and then go further down, is that the deal?
Just on average, what do you think the difference in the cost-saving is? 43 6/4/02 - FINANCE - BILLS 020075, 020348
I'm not sure of that cost. I could guess that it's half because of, as you said, in the roadway you have to go through the four inches of asphalt and the eight inches. Footways are usually four inches of concrete.
Okay. The reason I'm raising this issue is I have some pictures which I'd be glad to share with you. Apparently, what you do is you break up the concrete, make a trench, put the new main in, cover initially so people can get, I guess with some asphalt-type substance, and then you come back and pour concrete just in the trenched area; is that basically what you're doing?
That's correct. Typical restoration is to replace the one block that we disturbed in the footway.
Okay. I'll show you by way of the pictures but it's also been my 44 6/4/02 - FINANCE - BILLS 020075, 020348 experience, that match-up often doesn't work too well especially given the nature of what some of these footways look like. When you try to just fix the one in the middle, it's usually an area somewhere between the bottom of the steps and the curb; is that correct?
Right. So what I'm going to ask you know is since obviously you're making some cost saving by not being in the roadway, why don't you just do the entire footway as opposed to trying to patch it?
Councilman, we do have a resource issue that is associated with this. Much of this paving is done by third-party contractors. When we put contractors to do the entire footway, it actually takes them significantly more time than just in the areas that we've disturbed. In so doing, it delays other projects. So what it does is it limits our ability to keep up with the work as we move along.
Well, I 45 6/4/02 - FINANCE - BILLS 020075, 020348 understand that and I can appreciate that, but in the meantime, you have further negatively impacted the area where the people live. I mean, you get to do what you need to do, and I'm sure they're appreciative to have a new gas line out in front of their home. But if at the same time in the course of doing your work, I mean, you're going into the middle of the footway area, it is very difficult to match up either based on elevations, movement of the other slabs in that sidewalk area, and at the end of the day, I mean, somewhat in articulately I'll say it looks a little crappy.
And it can also lead to various water problems, runoff problems because you ultimately end up changing some of the elevations.
My experience has been typically the water runoff and elevation problems are the resurfacing of the streets multiple times without milling. But having said that, if we were to do all -- 46 6/4/02 - FINANCE - BILLS 020075, 020348
Well, but even in the areas where there is not that problem. I don't think you're going to see that problem necessarily in the 5700 block of Haverford Avenue. What your folks are going to experience is taking up the temporary asphalt, trying to match up new concrete to concrete slabs that have already started to either settle or break. It's very difficult. And the end result of which is, sure, it's a new concrete in there, it never looks right, and it doesn't match up or settle well.
You asked the question a little bit earlier why we don't do all of the sidewalk with the points you're making. In essence, we believe just in our side-bar right here that the cost would be triple compared to what we're spending today, so that's one of our concerns as well as the --
You're saying to do the whole sidewalk is now more expensive than going back out in the street? Is that your testimony?
No. I'm actually saying 47 6/4/02 - FINANCE - BILLS 020075, 020348 that doing the one area that we disturbed versus doing all of the sidewalk is much more expensive. We're not comparing it to the fact that we're moving out of the street --
Mr. White, I think that's rather obvious. I figured that part out. I'm saying, do you think that it is satisfactory, even with the newly poured concrete, to leave that part of the street where people live in that condition when the job is done? Your main role is to get a new main in the sidewalk because you don't want to be in the street. I understand that. That makes sense because the trench work never worked that well either, trying to match up the two. But if you're going to continue on this kind of path and that kind of program and if we're going into the footway area with all of the new activity, then I'm asking that you rethink the strategy because you end up leaving the condition worse than it was before you started.
Councilman, certainly we do not want to leave a situation like that. With regard to the coloring, the discoloration of new 48 6/4/02 - FINANCE - BILLS 020075, 020348 versus old, that's a feature of replacing the block. However you accurately pointed out that if there is blocks --
I'm less a about the esthetics than about the practicality of it. What I'm saying is if you have areas that are not perfectly level and the only way you get perfectly level is pouring new concrete all the way across, it is difficult for your folks to match it up. I'm not talking about colors. I don't really care about colors. You know, I'm not an architect.
We'll certainly look into this, Councilman, and report back to you what our finding are on this front.
Thank you very much. Are there any other questions? (No further questions.) 49 6/4/02 - FINANCE - BILLS 020075, 020348
We will not go to our resumed hearing for CDBG and NTI --
We have one amendment on the Capital Budget. We'd like to offer an amendment. Do we offer it now or in the meeting?
Okay, when we get to the public meeting, we will offer on amendment on the Capital Budget for PGW.
If there is anyone here who would like discussion now, because CDBG will take a little while, we're happy to entertain any discussion. Otherwise, we will go to the next public hearing. Is there anyone here? (No response.)
All right. Then we will assume everybody's fine and we will 50 6/4/02 - FINANCE - BILL 020275, RES. 020285 then go to NTI and CDBG and we will ask the clerk to, again, read the titles of the bills. And we will make an exception, and please, we don't want to allow more than five minutes for this because we ended the public testimony part, however, we will ask Cedar Park West CDC to come forward, Frankford Group Ministries Industries to come forward and Judith Robinson to come forward at one time. We will entertain that for five minutes after the clerk read title of the bill 12 and then we will ask the Administration to come forward so that we can begin our questions and hopefully move on. The clerk read the titles of both bills.
Bill No. 020275, an ordinance authorizing the Mayor on behalf of the City to file an application with the United States Department of Housing and Urban Development for Community Development Block Grant as required by Section 104 of Title of the Housing and Community Development Act of 1974, as amended, including all understandings and assurances contained therein and designating the 51 6/4/02 - FINANCE - BILL 020275, RES. 020285 Mayor and the Director of the Office of Housing and Community Development as the authorized representatives of the City to act in connection with application to provide such additional information as may be required and to accept the grant, all under certain terms and conditions. And Resolution No. 020285, a resolution approving the annual program statement and budget for the expenditure of the Neighbor Transformation Initiative bond proceeds for Fiscal Year 2003. (Witness comes forward.)
Thank you very much. We will now hear from Steve Culbertson, Frankford Group Ministries. Welcome and thank you.
Thank you, Madam Chair. Good afternoon. My name is Steve Culbertson, I'm the Executive Director of the Frankford Community Development Corporation. I want to thank Members of the Committee for allowing me to testify. I'll be very brief. I've been attending these hearings for a long time, about ten years. And when I started 52 6/4/02 - FINANCE - BILL 020275, RES. 020285 coming, I was scared, didn't know what I was talking about and it took a long time. I'm here today to request a change in the hearings because now these hearings are taking a lot longer than they ever have, and I'm pleased by that in that we are all more interested in community development and the revitalization of neighborhoods, which is my life's work. However, it's very hard for those of us who are trying to do development out in the neighborhoods to sit here for several days. And I would like to propose several things: One, that to the extent possible, project-related requests interaction between Council and us and Council and the Administration be worked out ahead of time to the extent possible. Two, that you have one hearing to interact with the Administration or the Administration would present to you their plan and that you would interact with them and then there would be another hearing, a separate hearing, for public involvement and testimony in response to what the Administration has presented to you. And in that public testimony, you would limit us in terms of the amount of time we can 53 6/4/02 - FINANCE - BILL 020275, RES. 020285 take to testify to two minutes and then cut us off. And if we go over that and go on another minute, then you cut off the mic. And I'm sure you can do that back in the back. I hope somebody's timing me so I don't go on beyond my two-minute limit. But it gets frustrating in that we come -- as of last Tuesday I came at 9 o'clock. I was here for three and half hours, 10 didn't get a chance to testify and had to leave 11 and wanted a chance to testify. And luckily enough, I'm friends with the Councilwoman and we said give Steve a chance to say these things, but not everybody gets that chance. So I'd just like to encourage you to do this in a different format. Now on to the real testimony, I just wanted to say that I support the Neighborhood Transformation Initiative as proposed and support the comprehensive plan as proposed. Frankford stands to benefit greatly from both programs. We are doing economic development with the Commerce Department, revitalizing commercial strip on Frankford Avenue, we're doing a lot of residential development with OHCD and the 54 6/4/02 - FINANCE - BILL 020275, RES. 020285 Redevelopment Authority and we've been closely with NTI on demolition and encapsulation of buildings in Frankford. And we hope that we'll be able to actually turn Frankford around to bring it back from being a very distressed community, and certainly some sections of it are more distressed than others, to being a place where the quality of life is high, property values stay at a relatively good rate, and people are able to live and raise their families in peace. That's really all I had to say. Thank you for the chance to express my support.
Thank you very much, Mr. Culbertson. And we certainly agree it's been a long process. And that I don't think it's a bad idea to -- I guess it's, what, a few weeks before that they have the public meeting before we have our hearings. And then by law, we have to have evening hearings which we also do one night at 6:00, I think, we have public hearings, don't we, as well? But obviously, it's still going on and it's made it very difficult. And I know 55 6/4/02 - FINANCE - BILL 020275, RES. 020285 you've been here over and over and over. And I think that this committee especially needs to consider maybe being able to have the Administration -- I don't know what the law requires, but we'll look into it, having the Finance Committee interact are the Administration and then having the public after that. But we'll certainly look into that for next year. And we thank you.
Cedar Park West CDC, Miss Shirley Randelman, welcome. (Witness comes forward.)
Please identify yourself for the record and begin your testimony.
My name is Shirley Randelman and I represent the Cedar Park West CDC located in West Philadelphia and I'm also a chairperson of the CDC and I just wanted to go on record as being in support the Neighborhood Transformation and the CDC on both bills.
Thank you so much. Thank you also for your leadership in West 56 6/4/02 - FINANCE - BILL 020275, RES. 020285 Philadelphia. Judith Robinson? (No response.)
All right, Judith Robinson stepped out. All right. We will now ask the Administration to come forward. (Witnesses come forward.)
Would you like to make is a statement? What is your pleasure? Please identify yourself for the record and we will proceed.
My name is Patricia Smith, I'm Director of Neighborhood Transformation. At the conclusion of the hearing last week, the Administration was asked to submit responses to a variety of questions to Councilwoman Blackwell's office. We've submitted those questions and supporting materials to your office yesterday. In addition, we were asked to explore feasibility of looking at the issue of retaining walls and how we might be able to support that with respect to a program activity. 57 6/4/02 - FINANCE - BILL 020275, RES. 020285
Councilman Nutter, we are hereby to -- Miss Smith is making a statement with reference to retaining walls. I know this area interests you.
Miss Wilkerson, Chief of Staff, who spoke with Councilman Nutter this morning, my understanding as a result of that conversation, we will be sitting down with your office to look at how we can design a pilot program that meets specific objectives with respect to the repair of common retaining walls that present health and safety hazards to neighborhoods, that we will look at strategies that -- we'll try to address new technologies and reduce costs, look at issues of some sliding scale in terms of contributions. So we're looking forward to scheduling that meeting to follow up with this concept of a pilot program to test a retaining wall repair program.
Okay. And I'm sorry I wasn't in my seat at the beginning. What does that mean in the context of NTI hearings or 58 6/4/02 - FINANCE - BILL 020275, RES. 020285 budget or funding?
The Administration is very much willing to work. We were thinking to suggest that for this pilot initiative that we fund it at about $500,000, that we try to identify three or four examples of retaining walls that meet criteria about dangerous conditions presenting a health and safety to the neighborhood or destabilizing properties.
If I can just ask, where did that figure come from? What's that based on?
Well, my understanding is that -- we're just putting that forth as a suggestion. It's based in part, I think, some preliminary numbers that your office may have had with respect to one particular property and the possible cost of that.
Which is about -- I think the number two years ago may have been 238. I mean, I'm not the only person that has a 59 6/4/02 - FINANCE - BILL 020275, RES. 020285 retaining wall problem. I think if you look at the research, Streets Department I think has identified at least 190 that need some level of attention. And I believe the number is 90 that are of a serious concern. At the hearing a couple years ago, the recommendation was to start even with a pilot program and a possible revolving loan fund. I think that hearing may have been either in -- I think that hearing was either 2000 or 2001 where a bill was passed to deal with this particular issue. The suggestion or the recommendation at that time was that a revolving fund be put together which would have people actually paying some costs for this but that it would be initially funded somewhere in the 2 to $3 million range. Now, I understand that we still have some work to do and I'm more than willing, if not excited, maybe even be jubilant, to further this discussion. Today is as far as it's ever gotten.
I would have a much greater comfort level, though, if we were talking about identifying a serious amount of 60 6/4/02 - FINANCE - BILL 020275, RES. 020285 money, knowing that we have some work to do and that it's a part of the budget that we're actually talking about. Otherwise, you're really just having a discussion. If you don't have any money and you don't have it identified and you don't know what you're dealing with, then it really is a discussion, then you've got to come back and all that. And I don't really want to keep doing that. I've kind of done that for a while.
Mm-hmm. Again, we're willing to sit down and work with your office with respect to this. My understanding was that we were going to make an effort to identify three or four retaining walls, really get a sense of the cost that so that we can then project out what it would take to adequately fund --
Let me make sure we're talking about the same conversation. My conversation with the Chief of Staff this morning, I think I told her specifically that there are probably four to six walls that I could think of off the top of my head which, you know, has got a fair amount of space up there, in West 61 6/4/02 - FINANCE - BILL 020275, RES. 020285 Philadelphia, one or two in the North Philadelphia portion of my district, and one or two in Overbrook.
But as I said, I'm not the only person in this Council that has a retaining wall problem, so I'm not going to sit here and act like I'm negotiating on behalf of all the rest of my colleagues nor do I think it's fair for me to make a, you know, kind of agreement. I don't want to say a deal, but even some agreement that says, Well, we're just going to do one little thing over here and ends up excluding, by the shear dollar amount, other people to participate. I mean, dangerous retaining walls are dangerous retaining walls. As much of any advocate and as passionately as I feel about, I think there are other members who are affected by this in other parts of the City, and if we're going to start something even on a pilot fashion, I think we should have some decent pot of money identified. I'm not talking about we're going to spend it like drunken sailors. And establish some standards that say, This is a 62 6/4/02 - FINANCE - BILL 020275, RES. 020285 dangerous situation. It is overwhelming to the people who are affected by it. And just like we deal with dangerous buildings and we take them down and literally to some extent worry about some of the details later on, the retaining wall problem, from my perspective, is about the same. So the one thing I'd like to help ensure is -- I appreciate the offer with regard to the $500,000. I think that that is a little low, acknowledging that we're not going to spend it all at one time.