Committee Hearing, March 19, 2007

COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Monday, March 19, 2007 2:30 p.m. - - - PRESENT: COUNCILWOMAN JANNIE BLACKWELL, CHAIR COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN WILLIAM GREENLEE COUNCILMAN JAMES F. KENNEY COUNCILMAN BRIAN J. O'NEILL COUNCILMAN JUAN RAMOS COUNCILWOMAN BLONDELL REYNOLDS BROWN BILLS 060052, 060108, 060109, 060389, 070150, 070169, 070072, 070073, 070089, 070090 and 070091 - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2

Good afternoon. Thank you for your patience this afternoon and thank you for your attendance. There are many bills to be considered. First will be the issue of the biosolids bill, and before we make our announcement, we will have the Clerk read the title of the bills so there will be no questions.

Bill 060108, an ordinance authorizing the Water Commissioner and the Procurement Commissioner, on behalf of the City of Philadelphia, to enter into a service contract with the Philadelphia Municipal Authority, pursuant to which the City will assume certain obligations under an agreement that the Authority will enter into with Philadelphia Biosolids Services, LLC to design, finance, build, own and maintain facilities and equipment, and provide operating services for the management of the City's 3 3/19/07 - FINANCE - BILL 060052, ETC. wastewater treatment solids, all under certain terms and conditions; and Bill 060109, an ordinance 5 approving an extension of the term of existence of the Philadelphia Municipal Authority and authorizing the Authority to design, build, finance, own, operate, maintain and lease facilities and equipment, and provide related services for the management of the City's wastewater treatment solids, all under certain terms and conditions.

Thank you very much. We read that bill first because we would like to announce that this bill 18 will be held subject to the call of the Chair. So if there is anyone here -- (Applause.)

Thank you very much. So if there's anyone here who is here just for that purpose, do understand that this bill will not be heard today. And "subject to the call of 4 3/19/07 - FINANCE - BILL 060052, ETC. the Chair" means it would have to even be advertised were we to consider it in the future. Thank you very much. Thank you all for coming out in this slippery weather. Thank you very much. Having said that, we note a quorum. To my left, Councilman W. Wilson Goode. To my right, Councilman William Greenlee. To his right, Councilman Frank DiCicco, and for the purposes of our quorum, we also have Councilman Jim Kenney. Thank you. Next we will hear the RCAP bills, and we will certainly ask Paul Deegan to come forward to testify with regard to the Redevelopment Capital Assistance bills. Thank you. Please identify yourself for the record and begin your -- I'm sorry. I forgot to have them read. Thank you. The Clerk will read the title of all four bills. 5 3/19/07 - FINANCE - BILL 060052, ETC.

Bill 070089, an ordinance authorizing the Philadelphia Authority for Industrial Development to file an application with the Office of the Budget, Commonwealth of Pennsylvania, under the Redevelopment Assistance Capital Program, in an aggregate amount not to exceed $1 million to assist in the conversion of the former Wills Eye Hospital in Philadelphia to the Jefferson Hospital for Neuroscience, and authorizing the City to enter into an agreement with PAID in furtherance of grant requirements, all under certain terms and conditions; and Bill 070090, an ordinance 18 authorizing the Philadelphia Authority for Industrial Development to file an application with the Office of the Budget, Commonwealth of Pennsylvania, under the Redevelopment Assistance Capital Program, in an aggregate amount not to exceed $2 million to assist in the development of the WHYY Learning Lab, and 6 3/19/07 - FINANCE - BILL 060052, ETC. authorizing the City to enter into an agreement with PAID in furtherance of grant requirements, all under certain terms and conditions; and Bill 060389, an ordinance 7 authorizing the Philadelphia Authority for Industrial Development to file an application with the Office of the Budget, Commonwealth of Pennsylvania, under the Redevelopment Assistance Capital Program, in an aggregate amount not to exceed $1 million to assist in the development of the Maria de los Santos Health Center, and authorizing the City to enter into an agreement with PAID in furtherance of grant requirements, all under certain terms and conditions; and Bill 070169, an ordinance 20 authorizing the Philadelphia Authority for Industrial Development to file an application with the Office of the Budget, Commonwealth of Pennsylvania, under the Redevelopment Assistance Capital Program, in an aggregate amount 7 3/19/07 - FINANCE - BILL 060052, ETC. not to exceed $2,100,000 to assist in the development of the Jewish Employment and Vocational Services, the Jewish Community Center of Philadelphia and the Pilgrim Gardens Retirement Community, and authorizing the City to enter into an agreement with PAID in furtherance of grant requirements, all under certain terms and conditions.

Thank you very much. Again, thank you, Mr. Deegan. Please identify yourself for the record and begin your testimony.

My name is Paul Deegan, D-E-E-G-A-N, and I represent the Philadelphia Industrial Development Corporation and Philadelphia Authority for Industrial Development. Thank you for listing the bills. I have submitted written testimony, so if you'd like, I could summarize each project. As you know, redevelopment grants are funded by the state's capital 8 3/19/07 - FINANCE - BILL 060052, ETC. budget and generally sponsored by the local state legislator -- can you hear me?

Thank you, Mr. Deegan.

These grants are typically sponsored by the local state legislator. The recipients of the grants are non-profits, generally colleges, museums, hospitals, social service providers. The state provides the funding through each county's industrial development authority; in this case, the Philadelphia Authority for Industrial Development, and the recipient of the grant must at least match the grant amount with funding from non-state sources. So it is a 50/50 match program. After the Legislature approves the capital budget, the Governor, through the Office of the Budget, authorizes PAID to submit applications on behalf of the recipients. That requires City Council approval and that's why these bills are 9 3/19/07 - FINANCE - BILL 060052, ETC. here today. So let me just summarize the projects that are the subject of the four bills. Bill 070090 is for the WHYY Learning Lab and it authorizes us to apply for a grant in an amount not to exceed $2 million to assist in this project. The Learning Lab at WHYY will be built adjacent to the station's existing Philadelphia headquarters. It will cover roughly 10,000 square feet. And the mission of the Learning Lab is to share the power of digital technology to foster a more connected and informed community in the broadcast area. Using advanced technologies, the Learning Lab programs will train both community groups and students, K to 12 students, to produce their own videos. It will also be used for corporate training, training teachers via distance learning and with face-to-face sessions 10 3/19/07 - FINANCE - BILL 060052, ETC. in the Learning Lab. Finally, the Lab will provide facilities to create electronic field trips and interactive musical performances for schools, exhibit digital art, and connect the region's citizens in ways never before possible. The total project cost is approximately $6 million. I think I've gone through the rest of the testimony first, so I ask that the Committee report this bill out of Committee with a favorable recommendation. I'll be happy to answer any questions you may have. I'll just go on to the next project, which is 060389, and this is authorizing PAID to apply for a Redevelopment Assistance grant in an amount not to exceed $1 million for the Maria de los Santos Medical Center at 4th and Allegheny Avenue, and that's in the Seventh Council District. The Maria de los Santos Health Center is the Delaware Valley Community 11 3/19/07 - FINANCE - BILL 060052, ETC. Health Incorporated's largest health center located in the heart of the Latino community. I think the other two are in Norristown and I think there's one in Fairmount. The project will consist of renovating a 29,000-square-foot building currently owned by the organization to house its expanding operations. 3 million, and I ask that the Committee report this bill out with a favorable recommendation. I'll be happy to answer any questions about this project. And if not, I can go on to the next one. Bill 070169 authorizes PAID to apply for a Redevelopment Assistance grant in an amount not to exceed $2,100,000. This is for three projects in Northeast Philadelphia: The Jewish Employment and Vocational Services, JEVS; the Jewish Community Center of Philadelphia; and the Pilgrim Gardens Retirement Community in Northeast 12 3/19/07 - FINANCE - BILL 060052, ETC. Philadelphia. All of these are in Northeast Philadelphia. 2-acre site adjacent to the Northeast Airport. The space will consist of two adjoining buildings totalling approximately 88,000 square feet. They will house the education trade components of JEVS' services and also the administrative offices. I believe JEVS has been in business for over 50 years. They're currently in an obsolete facility at Rhawn and Dungan, and the new site will provide all the room they need to continue their job-training activities.

The Jewish Community Center of Greater Philadelphia project includes the partial demolition and rehabilitation of the JCC's Klein Branch Facility, which is located at 10100 Jamison Avenue. That's right at Red Lion and Jamison in Northeast Philadelphia. The Klein Branch 13 3/19/07 - FINANCE - BILL 060052, ETC. Facility is a 30-year-old community center that serves Philadelphia's senior citizens. The total project cost for the renovation is $1 million and the RACP grant is $500,000. And the third project in this bill is Pilgrim Gardens, which is a non-profit subsidiary of Wesley Enhanced Living. They'll be renovating an existing building located at 7023 Rising Sun Avenue into an assisted living facility for low-income seniors. The newly renovated space will consist of enlarged living quarters and community space. The renovations are scheduled to begin in October 2007 and conclude in January 2009. 5 million and the RACP grant is $1 million, and I ask that this bill be reported out with a favorable recommendation at the next meeting of Council. I'd be happy to answer any questions about these projects. And the last one is Bill No. 14 3/19/07 - FINANCE - BILL 060052, ETC. 070089 and this bill authorizes PAID to apply for a Redevelopment Assistance grant in an amount not to exceed $1 million to assist in the development of the Jefferson Hospital for Neuroscience. Thomas Jefferson University will renovate and convert the former Wills Eye Hospital building located at 9th and Walnut Streets in Center City Philadelphia into the Jefferson Hospital for Neuroscience. The rehabilitation of this building will provide dedicated space where neuroscience physicians and researchers will address the management of neurological diseases, including prevention, diagnosis, treatment and cure. The new JHN facility will occupy an eight-story building that is approximately 200,000 square feet, plus an attached garage. The total project cost is $11 million and the grant is $1 million, and I ask that this bill be reported out of Committee with a favorable recommendation at the next 15 3/19/07 - FINANCE - BILL 060052, ETC. session of City Council. I'll be happy to answer any questions about any of these bills or any of the projects. Thank you.

Thank you, Mr. Deegan. Are there any questions from members of the Committee? (No response.)

The Chair would also like to note that Councilwoman Blondell Reynolds Brown is present. Thank you very much. Is there anyone else here to testify on these RCAP bills? (No response.)

Thank you.

Thank you for your time and thanks to the District Councilpeople for introducing these very important bills and getting them scheduled so quickly. Thank you. 16 3/19/07 - FINANCE - BILL 060052, ETC.

Thank you. Next we will hear at the request of the bill sponsor -- and then we'll come back to you, PGW -- we will hear those listed in our packets as No. 8 5. That is the condo tax credit bills introduced by Councilman Kenney. We will ask the Clerk to read the title of Bill No. 070073.

Bill 070073, an ordinance amending Chapter 19-1300 of The Philadelphia Code, entitled "Real Estate Taxes," to provide a credit against the tax for owners of condominiums and cooperatives who do not receive regular City refuse, recycling and bulk item collection services, all under certain terms and conditions.

Thank you very much. The Chair likewise notes that Councilman Juan Ramos is here. As witnesses, we call to 17 3/19/07 - FINANCE - BILL 060052, ETC. testify Mr. Gary Krimstock, Esquire. Next will be Thomas J. Davis, President of the Philadelphia Condo Association, Condo Residents. Welcome. Feel free to identify yourselves to the record.

Madam Chairperson, members of the Committee, my name is Gary Krimstock. I'm an attorney in Philadelphia. I'm here as legal counsel for the Philadelphia Condominium Managers Association. Tom Davis to my left is the President of PCMA, the Philadelphia Condominium Managers Association. He also is the Property Manager at the Kennedy House cooperative. I would like to take this opportunity to thank Councilmen Kenney and DiCicco for introducing this bill and supporting PCMA in its battle over the trash issue for lo these many years. I have submitted written testimony to the Committee, and in an effort to be brief, I would just 18 3/19/07 - FINANCE - BILL 060052, ETC. summarize and hit some of the high points of that testimony, but I would request the Committee to read the information contained therein, as it has some details that I won't cover unless there are questions from the Committee.

Thank you. We're happy to submit your entire testimony as part of the record.

Thank you. PCMA was formed in 1985 among a group of condominium and cooperative associations in Philadelphia for many issues of support, coordination, to develop synergies in the professional management of these associations, and one of their issues that was a primary focus from the very beginning was the inequality of municipal services, which is not unusual to encounter in Philadelphia or in other municipalities across the country. And as the condominium regime type of ownership has grown across the country -- and we're all 19 3/19/07 - FINANCE - BILL 060052, ETC. familiar with it now. We probably have children or parents or friends or ourselves who reside in common-interest communities, community associations. This issue has become ever-more important. It has been addressed in various other municipalities in other ways. Most closely, our neighboring state of New Jersey has had a municipal services equalization legislation since 1991. Councilmen Kenney and DiCicco recognized this need several years ago, and as the Committee may recall, there was a bill, a prior bill, 010659, which was passed unanimously by City Council, that addressed the issue of fairness in municipal services; namely, trash collection services. And that bill 21 finally decided, once and for all, that if residents and households and taxpayers in the City of Philadelphia who reside in community associations, whether they be condominiums or co-ops or homeowner 20 3/19/07 - FINANCE - BILL 060052, ETC. associations, they are paying the same taxes as other households and taxpayers and residents in the City of Philadelphia, but they were not receiving municipal trash collection service. This was unfair, this was not equal, and Council recognized this by passing that bill. Unfortunately, it was not implemented as a law until after a long battle and successful lawsuit was instituted by City Council against the Mayor. In 2005, the City Streets Department came up with some regulations to provide this service that was now mandated for these homeowners in the City of Philadelphia, because, in effect, all of these residents, all of these taxpayers are paying twice for trash removal service. They're paying once with their City taxes, as do other taxpayers in the City, and they're paying a second time in their association dues to their community association, who is 21 3/19/07 - FINANCE - BILL 060052, ETC. required to provide private hauling service for this trash since the City is not picking it up. As a little bit of background, there's probably a little misperception among many people about the nature of the homeowners and residents in these types of units. Some people believe that all of these condominiums are luxury buildings, they're all located at Rittenhouse Square and all the residents and owners are wealthy people, and that's certainly not the case. If you look around, you'll see that these types of developments are cropping up in every neighborhood in the City. They're not all in Rittenhouse Square. The residents are not all wealthy. In fact, there are many owners who are young, single people or young couples just starting their careers and this is a small living space that is often the only type of housing that they can afford. It's also occupied by older people, retired people who are 22 3/19/07 - FINANCE - BILL 060052, ETC. on low or fixed incomes and, again, purchase these units because they are small in size and they are easy to afford compared to single-family homes in the City. We also have a number of City employees and public servants that need to live in the City and be convenient to public transportation. Those are also some of the owners and occupants of the condominiums in the City.

So no matter whether you live in a large single house in Chestnut Hill or in Center City or in a smaller rowhouse in South Philadelphia or in Northeast Philadelphia or whether you live in a high-rise condominium on Rittenhouse Square or a small condominium in the Northeast, you still pay the same taxes, you're still entitled to the same services, and you still need to have your trash collected, and, fortunately, that's what this bill addresses. Now, this bill in particular I 23 3/19/07 - FINANCE - BILL 060052, ETC. think provides a simple, a clear, an efficient and a less expensive way of providing this service to the households in Philadelphia than for the City to actually go out and pick up the trash. We've seen from some of the City's own estimates -- the Streets Department did a survey and came up with estimates back in 2002 when there were approximately 20,000 common-interest association units in the City of Philadelphia and they developed figures which showed that there would be a substantial investment in capital equipment that would be required in terms of trucks, dumpsters. Special labor would need to be trained to operate that equipment, and, of course, more manpower would be needed. So there was an initial large capital investment that would be required, as well as additional operating costs on an annual basis. The bill that is before the Committee today provides for a tax credit to be offered to the unit owners to 24 3/19/07 - FINANCE - BILL 060052, ETC. represent the costs that they are now incurring for the private collection of their trash, and that would eliminate the need for the City to make any investment in equipment, to incur any additional payroll or labor expense or any additional training that might be required. It should be kept in mind that these studies, even assuming they were accurate, were made in 2002. We're now five years later. We estimate that there has at least been a ten percent increase in the number of condominium units in the City, so that we're probably at about 22,000 now. As you well know, there are many hundreds more that are in the process of development, construction or on the planning boards, and certainly these will be growing in the future. The numbers will be growing. Just as an example of a statistic that's worth noting, there are now approximately nationwide 250,000 25 3/19/07 - FINANCE - BILL 060052, ETC. common-interest community associations housing more than 50 million people across this country. Obviously this is a trend that's going to continue and will grow in the future. If the City were to make the investment in the equipment necessary and the labor necessary to provide this service, as is now mandated by the law, that cost would be growing exponentially into the future. The issues presented by the tax credit would be at $200 maximum per unit per year. The costs of the condominiums, most of them don't even approach that cost. 4 million a year. We estimate it's more likely to be less than $2 million, substantially less than $2 million per year in the cost to the City in affording these tax credits, while the investment in capital equipment and the additional labor required to 3/19/07 - FINANCE - BILL 060052, ETC. actually provide the service would be much more expensive than that. We have trash pick-up now for other households in the City. The Streets Department provides a pick-up of an average household's trash output once per week. That's bags of trash or six 9 cans of trash equivalent to a maximum of 10 240 pounds of trash per week. In many of 11 the community associations, those are 12 often in high-density, multi-family buildings, whether they be high rise or garden complexes. And that normal average household output of trash would certainly be a huge concentrated volume of trash that could not be picked up in a one-day-a-week collection.

That would impose upon the associations a tremendous burden in the purchase of additional equipment that would be required to store, refrigerate the trash waiting for pick-ups, provide dumpsters that would accommodate the City vehicles, whereas now all of the trash is picked up, 27 3/19/07 - FINANCE - BILL 060052, ETC. removed from the City in a very effective and cost-efficient manner by these households providing the service for themselves. So the point is that they are perfectly willing to continue to provide that service for themselves, but they don't want to pay twice for it, and this bill will eliminate that problem. Tom Davis is going to speak for a couple of minutes about some additional background here. If the Committee has any additional questions for me, I'd be happy to answer them, but we do urge this Committee to support the passage of this bill. It's a very valuable and important right for a large population in this city that's growing every day. Thank you.

Thank you. We're happy to hear all the testimony, then we'll raise questions.

Thank you.

Thank 28 3/19/07 - FINANCE - BILL 060052, ETC. you. Is Joan Rosenfeld here, too?

Yes.

Thank you. Please identify yourself and begin your testimony.

Good afternoon, ladies and gentlemen. My name is Tom Davis and I am the President of the Philadelphia Condominium Managers Association as well as the General Manager of the Kennedy House. We have been getting together like this for the last ten years. Your faces are very familiar and your names, too. We want to thank you for the opportunity, Councilman, for bringing this up, and, Councilman DiCicco, we owe you both a debt of gratitude. We're only talking here about the most minimal service a city can give its residents. We're not looking for gold-plated streets or new lighting or 29 3/19/07 - FINANCE - BILL 060052, ETC. anything else. We're just asking to have our trash picked up. Like the little girl said in Poltergeist, "we're back" and we are here again to solicit your assistance and help. You were right and did the right thing two years ago, as well as City Council. We're asking you again to stand by our request and do it again. I just want to reiterate something that our counsel mentioned a minute ago. Too often we think of condominiums as being for the wealthy. Kennedy House is a cooperative. William Penn House is a cooperative. The Penn Center House is a cooperative. 2101 is a cooperative. They were built for middle-income people. They were built by HUD. They remain for middle-income people. These are people who work for a living like you do and like I do. They need to get this tax break. I appreciate your time and your consideration. 30 3/19/07 - FINANCE - BILL 060052, ETC. Twenty-two thousand units represents 22,000 families, and these people are the ones who vote every time, and they need your support just like you need theirs. Thank you very much. We look forward to it. Thank you.

Thank you very much. Joan Rosenfeld is the only other person who is due to testify, unless there's someone else here, and then we'll have the Commissioner, Nancy Kammerdeiner, come forward. And we'll ask questions, so don't go far, because we do have questions. Thank you. Good afternoon. Welcome. Please identify yourself for the record and begin your testimony.

Good afternoon. I'm Joan Rosenfeld and I'm here representing the Community Association Institute, the CAI, and CAMCO Management Company, the company that I serve as 31 3/19/07 - FINANCE - BILL 060052, ETC. President. To my left is Tony Campisi, who is the Executive Director of the CAI. Now, that's CAI, Community Association Institute. We are the trade organization that represents planned communities throughout the United States and the chapter that is Pennsylvania Delaware Valley chapter. We also want to express thanks to Councilmen DiCicco and Kenney for bringing this to the group again and for the Committee's consideration. The way this bill is presented, it is the most efficient and effective way for you to treat those folks in the City and a lot of them who are in planned communities. They are taxpayers, and obviously if you credit their taxes, that will benefit what they pay ahead to the association for trash collection. So this is an arrangement that serves both groups well. We are not asking for the City to add employees or equipment. The 32 3/19/07 - FINANCE - BILL 060052, ETC. associations are perfectly willing to continue with their private haulers, but the relief is to the voters. And obviously in our associations, CAMCO represents -- some of them wealthy, some of them not -- Society Hill Towers, Hopkinson House, Center City, The Barclay, The Grandview, Waterfront Square, Naval Square, Wanamaker House, The Dorchester, Tivoli. But there are a lot of folks who are taxpayers and there are a lot of folks who are voters, and for them to get some relief in this area and equality in this area is what we are advocating. So I thank you for your time and your consideration of this bill. Thank you.

Thank you very much. Would members of the Committee like to raise questions now or would you like to wait until the Revenue Commissioner comes forward? 33 3/19/07 - FINANCE - BILL 060052, ETC. (We'll wait.)

All right. Thank you very much. Thank you all very much. Nancy Kammerdeiner, Revenue Commissioner. Mr. Malley, thank you very much. Mr. Malley first please come. Thank you. I'm sorry. I didn't know you wanted to speak.

Sorry, Madam Chair. I thought you were aware that we were testifying on an amendment that was drafted by Councilman Kenney, the prime sponsor.

I'm sorry. I am now, so all is well.

I'm with Nancy Goldenberg from the Center City District and she has a statement she'd like to make on the amendment.

Thank you.

Thank you. 34 3/19/07 - FINANCE - BILL 060052, ETC. Good afternoon. My name is Nancy Goldenberg. I'm the Vice-President of Planning for the Center City District. The Center City District clearly understands the logic of providing condominium owners and residents of cooperatives with a tax credit. These same residents directly benefit from services provided by the Center City District, including daily supplementary cleaning and daily security patrol provided by our community service representatives. They also benefit from more than $45 million worth of public improvements that the Center City District has made in the public environment through the installation and ongoing maintenance of lighting, signage and other pedestrian amenities like trees, bus shelters and benches. Therefore, in order to eliminate any confusion, we very much appreciate Council's willingness to clarify with this amendment that the exemption granted 35 3/19/07 - FINANCE - BILL 060052, ETC. in this ordinance does not extend to special service districts or neighborhood improvement districts. Thank you.

The only part of the amendment that we're interested in is Paragraph 3, the last paragraph. On the bill itself, we have no problem with it.

Thank you.

Thank you.

Thank you. Ms. Marsha Bacall. Is there anyone else before we hear our Commissioner and then we'll have discussion? (No response.)

Thank you very much.

Thank you, Madam Chair.

Thank you. Welcome. 36 3/19/07 - FINANCE - BILL 060052, ETC.

I should be very used to this because I've been coming back to speak to all of you in one way or another for the last eight or nine years. But I did not come prepared to speak, but it occurred to me that you need to hear from a citizen, somebody who lives in a condo, who is on fixed income, who bought the condo when it was relatively cheap and is being pressured from all sides. I do not see this as a tax relief. I see this as a guarantee that vertical people will be reimbursed for what horizontal people have been taking for granted for a long, long time, and that is the only reason why I am sitting here and speaking. It's been too long denied. You get awfully tired of hewing to the same line over and over again. Take care of this. Just take care of it. People who live in condos and co-ops deserve equal treatment under the law, and that's all this is, fair, equal treatment. 37 3/19/07 - FINANCE - BILL 060052, ETC. I thank you.

Thank you, Ms. Bacall. Would Commissioner Nancy Kammerdeiner come forward, our Revenue Commissioner. Please identify yourself for the record and make your testimony, and, again, afterwards we'll have any discussion necessary on the issue. Thank you. COMMISSIONER KAMMERDEINER: Good afternoon, Councilwoman Blackwell and members of the Committee on Finance. I'm Nancy Kammerdeiner, Revenue Commissioner, and I'm pleased to be with you today to present testimony regarding Bill No. 070073. This bill will amend Chapter 21 19-1300 of The Philadelphia Code, entitled "Real Estate Taxes," to provide a credit against the tax for owners of condominiums and cooperatives who do not receive free regular City refuse, 38 3/19/07 - FINANCE - BILL 060052, ETC. recycling and bulk item collection services. The Administration is opposed to this bill. The credit would be equal to the amount the owner paid for refuse, recycling and bulk item collection services that were rendered during the prior year when the City did not provide such collection services at no cost to the condominium or cooperative, provided that the credit does not exceed $500 for any tax year. If approved, this credit would be effective for the tax year 2008 and thereafter. To receive the tax credit, the taxpayer would be required to submit an application to the Department of Revenue --

Excuse me, Commissioner. Point of information. Councilman Kenney.

Thank you, Madam Chair. I'm sorry to interrupt, but there are going to be amendments. One of 39 3/19/07 - FINANCE - BILL 060052, ETC. the amendments we've talked about was the special service district, but there's another amendment that's changing the 500 to 200. So any of your calculations in your testimony should be based on the $200 number, not the $500. COMMISSIONER KAMMERDEINER: At the time it was written, it was 500.

It's not your fault. I just wanted to make sure that the record was clear that your calculation is based on 500. That will now be 200. COMMISSIONER KAMMERDEINER: And exactly why I kept the 500 in there. I had heard that there will be an amendment.

Yes. COMMISSIONER KAMMERDEINER: But wasn't sure when it would be submitted and so --

Today. COMMISSIONER KAMMERDEINER: -- I did not alter the testimony. 40 3/19/07 - FINANCE - BILL 060052, ETC.

Today. But thank you. Sorry. COMMISSIONER KAMMERDEINER: That's okay. To receive the tax credit, the taxpayer would be required to submit an application to the Department of Revenue, along with documentary proof of their eligibility to receive the credit. I have a number of issues and concerns about this proposed legislation as drafted. First, the Constitution of the Commonwealth of Pennsylvania requires that all taxes shall be uniform upon the same class of subjects. The Constitution calls upon the General Assembly to establish standards and qualifications for any special tax provisions and specifically mentions the establishment of a class or classes of persons who because of age, disability, infirmity or poverty are determined to be in need of tax exemption or of special tax provisions, special tax provisions for a 41 3/19/07 - FINANCE - BILL 060052, ETC. limited time period to encourage improvement of deteriorating property and special tax provisions for long-time owner-occupants when the values of their properties have increased because of the restoration of other properties or construction in their neighborhood. With these exceptions, the General Assembly and the Courts have generally not supported the creation of special classes of real estate taxpayers. The creation of a special class of real estate taxpayers for those who did not receive City refuse, recycling or bulk item collection at no cost is especially problematic. Although it is correct that at one time the City did not provide such collection services to condominium and cooperative buildings with more than six units, following the resolution of a court case, the Streets Department does now offer collection to condo and co-op owners on the same weekly basis that collection is provided to 42 3/19/07 - FINANCE - BILL 060052, ETC. other property owners throughout the City. To date, few condominium or cooperative buildings have accepted the City service. Most have opted to continue to pay for private collections. It would be difficult to identify and support a uniform class of taxpayers who should receive special tax treatment because they've decided to continue to buy private services instead of accepting the service that the City is offering. Even if such a class of taxpayers could be supported under the Pennsylvania Constitution, there are issues with the cost of this proposed legislation. The number of condominium and cooperative units is increasing. Depending upon the timing and the source, the numbers I've seen range from 22,000 to 28,000 units whose owners might be eligible for these real estate tax credits. If all applied for the maximum credit -- and, again, as the Councilman has pointed out, these calculations are 43 3/19/07 - FINANCE - BILL 060052, ETC. based on $500 -- the cost to the City's General Fund would be between $11 million and $14 million annually. 4 million. At a time when there are more demands on the General Fund budget than can be funded, the loss of this real estate tax revenue would require reductions in expenditures in FY08 and beyond. There will be administrative costs to implement and maintain this credit program. Programming will be required to add the credit to TIPS, the integrated tax system, so that there are screens for data entry and retrieval and the credit is recognized in the real estate bill calculations and payment processes. Permanent staff will need to be trained so that they understand the credit program and can provide appropriate customer service. Temporary staff will need to be hired each year to 44 3/19/07 - FINANCE - BILL 060052, ETC. assist in the review of the applications and the data entry of the approved credits to each taxpayer account. Regulations will need to be developed and procedures implemented to deal with issues like the application of credits when a property is sold and how to handle the credits if the amount exceeds the tax liability or the tax account is delinquent.

In addition, this credit program will affect the way the split of real estate taxes between the City and the School District is handled. Currently, all collections for a given tax year are split on the basis of the tax relationship for that year. Since this credit program will only affect the City's share of the tax, the split will need to be adjusted for every payment that includes a condo/co-op credit. In addition to the constitutional and cost issues already identified, there are a number of additional problems with the legislation. 45 3/19/07 - FINANCE - BILL 060052, ETC. The legislation does not distinguish condominiums and cooperatives used for residential purposes from those used for commercial purposes. There are differences in the City services provided for other residential and commercial properties. Council's intention here should be clarified. In the case of a cooperative, the legislation, as currently drafted, would apply to the cooperative association that owns the real estate, not the individual shareholders or members who hold a cooperative interest. As a result, the maximum credit of $500 would apply to the entire cooperative, no 18 matter how many individual units it might contain. Council's intention should be clarified here as well. The bill requires each taxpayer to apply for the credit. However, condominium associations generally pay the cost of common services like trash collection from the condo fees collected 46 3/19/07 - FINANCE - BILL 060052, ETC. on a proportionate share basis from the owners of the units. As a result, administrative burdens would be created for the individual owners who must apply with documentation, the condo associations that will need to provide pro rata documentation to the owners of the individual units, and the Department of Revenue that will need to review thousands of applications. The flexibility to allow Revenue to provide in the regulations for applications from condominium or cooperative associations on behalf of all the units they represent could alleviate some of this burden. I understand that amendments may be offered to this legislation that will address some of the concerns I've raised. I would welcome the opportunity to work with you to address the other issues of this legislation if it's to move forward. This concludes my testimony.

Thank 47 3/19/07 - FINANCE - BILL 060052, ETC. you very much. I think we'll have several questions here. Obviously one of mine was the issue of dealing with recycling, but it seems to me -- and I'll question the sponsors of this -- that this amendment you gave us this morning does define residential planned community as opposed to other condos and it does deal with an area that's already defined as a community in an economic improvement district. And so it clarifies those two areas, but there are many other areas that the Commissioner raised with regard to the law and special taxation. And her testimony obviously, as we all just heard it, states that the City has offered to provide a service that the condo associations have refused and many others. So we certainly would hope there's somebody who can respond to the issues raised today. Having said that, I'll call on my colleagues to be more specific. Councilman Greenlee. 48 3/19/07 - FINANCE - BILL 060052, ETC.

Thank you, Madam Chair. COUNCILMAN DiCICCO: It's Greenlee.

That's what I said. Listen, I tell you, when he first was elected, I heard somebody on the radio say Councilman Greentree. So anything close to that is not bad.

I've been known to answer to a lot of things. Good afternoon, Commissioner. COMMISSIONER KAMMERDEINER: Good afternoon.

A couple things that occurred to me through your testimony. One -- and I know this probably doesn't involve as much money, but I remember years ago -- I don't know if you were involved then -- that there were adjustments made to people's water bill, water and sewer bill. I particularly recall some people in the Somerton section of the City who did not 49 3/19/07 - FINANCE - BILL 060052, ETC. have sewer services and they were always paying water and sewer bills and there were adjustments made there. COMMISSIONER KAMMERDEINER: The water fees and the sewer fees in terms of the rates are separate and so we can charge specifically for water and specifically for sewer, and I think that's why they were able to be severed in that manner. There are some people in various areas of the City who don't receive sewer services. They have septic tanks or --

Cesspools. COMMISSIONER KAMMERDEINER: -- whatever the situation might be, and we do have a number of water only customers.

But I think at one time they were paying and there were changes made when it was realized that that wasn't equitable. COMMISSIONER KAMMERDEINER: I think that might be true, but also I 50 3/19/07 - FINANCE - BILL 060052, ETC. think the original rates were lumped together and a number of years back the rate hearings established separate rates for water and sewer, and I think that's at the point in time it happened. I wasn't involved in it, so --

I think the residents had to go to court to get it, though, from what I remember. COMMISSIONER KAMMERDEINER: I wasn't involved in it at the time.

Similar to what these folks had to do. COMMISSIONER KAMMERDEINER: I just know that they are separate and there's separate rates there.

And I guess -- and maybe this is addressed better if the Streets Commissioner was here, but it would seem to me that this makes a lot more sense than all these people -- I see my friend from the Philadelphian back there. I don't know where they would 51 3/19/07 - FINANCE - BILL 060052, ETC. put all that trash to get it picked up once a week by the City. You have all kinds of issues of going on private property and all that kind of thing. Here it just seems to me off the top to be a lot -- no pun intended -- cleaner to do it this way. And I know there will be adjustments that you have to make as the Revenue Commissioner. I understand that. Obviously there will have to be tremendous adjustments, it would seem to me, that the Streets Department would have to make to pick up all that trash, because right now, I mean, we hear they barely get through the day and sometimes they get backed up and all that kind of thing. If you start collecting this much more trash, that sounds to be a burden there, too. So it's a burden one way or the other, isn't it? COMMISSIONER KAMMERDEINER: I can't comment completely on it, but in preparing this testimony, I did receive some information from the Streets 52 3/19/07 - FINANCE - BILL 060052, ETC. Department where they outlined the number of trucks, the number of staff that they would need in order to collect from all of the condominiums that they had identified at the time that they put together the proposal, and it's on that information that I based the cost figures I included in my testimony on what it would cost or what we estimate it would cost for the City to do once-a-week pick-up.

Madam Chair, just for a point of information, because it's a little aggravating. Back in 2001 when we had this discussion, we were trying to get the City to pick up the trash and they didn't want to pick up the trash. The estimates for the trash removal were between $5 and $8 million. Now that we've gone all through court and now the City has to pick up the trash, the estimate for picking up the trash is 3.3 million. Now, it seems to me that the 53 3/19/07 - FINANCE - BILL 060052, ETC. number will be variable based on whether or not you want to pick up the trash back in 2001, which you didn't. Now in 2007 when you're forced to pick up the trash, now you want to pick up the trash and not give the tax credit, but the cost of picking it up is $5 million cheaper. It's just stunning. It's stunning. I'm going to go back and get the notes of testimony, because it was between 5 and 8 million when you didn't want to pick up the trash. Now it's 3.3. Magic. Anyway, thank you.

The Chair notes that Councilman O'Neill is present as well.

I'm sorry. I'll be finished in a minute. I guess it was just along the lines that Councilman Kenney just said, I remember the Administration fighting so hard to have to do this. And I think the idea of a tax credit was always floated 54 3/19/07 - FINANCE - BILL 060052, ETC. out there. I mean, this isn't something new. And I think a lot of the advocates for the tax credit -- and I wasn't here at the time, but if I was, I think I would have been one of those -- was the argument that we're making now, that it just seems to make more sense for everybody. It's going to be cumbersome in some ways, no matter how you do it, but this would seem to be -- just seems to make more sense. And, again, you can't answer some of the issues the Streets Department would have to do, but it would seem -- COMMISSIONER KAMMERDEINER: You would have to talk with them.

-- to me -- and maybe they could have been here, too, or somebody speaking for them, because it would just seem just the logistics could be -- I can picture some of these buildings. It would be a problem. And that was brought up from 55 3/19/07 - FINANCE - BILL 060052, ETC. the beginning. This isn't something that's just being discussed now. So it just seems to me that this is the better way to do it. And Councilman Kenney does raise a question. I haven't seen things get that much cheaper in the City over a few years. I was wondering what the difference was there. I don't know, again, if you could answer that, but that is a significant difference. I wish everything got cheaper over the last five years. COMMISSIONER KAMMERDEINER: I only have the current information from Streets. I don't have the comparative data.

Okay. All right. Thank you. Thank you, Commissioner. Thank you, Madam Chair.

Thank you. Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, 56 3/19/07 - FINANCE - BILL 060052, ETC. Madam Chair. Good afternoon, Commissioner. COMMISSIONER KAMMERDEINER: Good afternoon. COUNCILMAN DiCICCO: On that same line of question from Councilmen Greenlee and Kenney, the estimate from the Streets Department, 3.4 million, do you happen to know whether that was an estimate based on what a per household property owner pays citywide and calculating that against the to 28 14 thousand units? Is that how they got to 15 that number? 16 COMMISSIONER KAMMERDEINER: I 17 don't believe so. I think they 18 identified the number of trucks, the 19 number of routes, the number of trucks 20 and the number of staff they would need 21 in order to support that. 22 COUNCILMAN DiCICCO: Personnel, fuel, equipment, et cetera. COMMISSIONER KAMMERDEINER: Right. 57 3/19/07 - FINANCE - BILL 060052, ETC. COUNCILMAN DiCICCO: Hypothetically, if we use Ms. Bacall's analogy and every one of these vertical units were laid down on its side and we had to 28 thousand more individual 7 rowhouses to pick up from, how much do 8 you think that would cost us? 9 COMMISSIONER KAMMERDEINER: I'm 10 afraid I'm not qualified to answer that 11 question. 12 COUNCILMAN DiCICCO: I mean, 13 it's got to be an astronomical number. 14 And I'm almost tempted -- and lately I've 15 become in a protesting mood. I've been 16 taking to the streets lately, and that's 17 something I normally don't subscribe to. 18 But in addition to maybe moving all the 19 trash we collect down to two very 20 spectacular sites on Delaware Avenue, 21 maybe -- we need to look at this. I 22 mean, I got to ask Councilman Kenney. We've been dealing with this since '01?

'01. 58 3/19/07 - FINANCE - BILL 060052, ETC. COUNCILMAN DiCICCO: And we're back to where we started. And I know you work for the Administration. I know you're here to give testimony that the Administration is asking you to do, but it just doesn't make any sense to just keep dragging this thing out any longer. But maybe the other thing in the protesting mode that I'm in these days, maybe the condo units who have not yet complied with putting the trash out, maybe they all should one day a week put all the trash from every high rise that you have out on the curb. Do it. Society Hill Towers, Wanamaker House, every single co-op, every single high rise, take the time -- you have building managers over there. Bring one day's worth of trash out to the sidewalk. I think we may get a better response. That's just a wild suggestion, but maybe that's what you need to do. Because I could imagine the Towers alone, they'll probably have trash around the entire 59 3/19/07 - FINANCE - BILL 060052, ETC. perimeter of that place down Front Street, Chestnut Street, Spruce Street, you name it, Walnut Street, whatever. Maybe that's what you need to do. Because apparently I think, unfortunately, we're going to pass this bill out today, I assume. We're going to wind up right back where we were. The Administration is not going to agree to do it and where do we go? My next term -- hopefully my next term -- I guess we'll be talking about it in '11. But this is getting to be -- it's ridiculous. I mean, I don't know how else to describe it. This has been six years of this. And Citizens Alliance may be able to come out and help you put the trash out when they're done sweeping my sidewalk or whatever, but in any event, we'll try and help you out as best we can to get your trash taken away, but I think you might want to consider that.

60 3/19/07 - FINANCE - BILL 060052, ETC. Councilman Kenney.

Thank you, Madam Chair. The Mayor and I get along better now, so I'm going to be calm. And I do like him and I appreciate the interaction with him now. Since 2001, this is a cat chasing its tail. We tried to get the City to live up to their responsibilities to collect the trash. They didn't want to do it. So we passed the bill. The Mayor vetoed it. We overrode the veto. He refused to do it and then we went to court and we won. Now you're forced to pick up the trash. We had the discussion on how the cost went down as opposed to what it was before, but there always was a simple solution to this and it wasn't a tax credit. I mean, the reason we're here with the tax credit is because we tried to do the trash, we tried to negotiate just a reimbursement. My whole 61 3/19/07 - FINANCE - BILL 060052, ETC. goal from the beginning on this was to have the City sit down with the associations and say, Look, show us a bill for your costs during the course of the year. They get two days' pick-up cheaper than it costs for us to pick up one day, in my opinion, but that remains -- that could be argued. Just sit down and negotiate a reimbursement annually. We don't need the tax credit. We don't need to go through all the extra employees and all the paperwork. We don't need to do any of that. It's an issue of fairness, and the fairest way to do it is to reimburse all or some of the costs directly so we can get around the uniformity clause. We don't have to hire another whole slew of people, accountants and bookkeepers. We don't have to hire all new sanitation workers and new trucks. It's just a negotiation. That's all it ever was. When we were going through the litigation, all I ever wanted was 62 3/19/07 - FINANCE - BILL 060052, ETC. negotiation. There's so many condo associations and co-ops in the City, let's just sit down with their lawyers and our lawyers and say, What percentage, if not a hundred percent, what percentage? Because as we said earlier on, some condos and some co-ops will reimburse their people directly. But I know a lot of condos and co-ops that I've talked to, especially the condos, who would take that money and do something else with it. They'd beautify the area. They would fix the concrete. They would fix the benches. They would landscape. They would do things to improve the entire area that surrounds them or they'd give the money back to their members, whatever their members decided they wanted to do with it. I'm just tired of jumping over hurdles on something that's so simple. It's so simple. We don't need new trucks. I don't even need a tax credit or any new office to administer the tax 63 3/19/07 - FINANCE - BILL 060052, ETC. credit. All we need to do is to sit down and say, You know what, this is fair, let's negotiate it, let's come up with a number, and every year the City writes a check and it's over. That's all. I mean, I don't know. (Applause.)

I think I was very nice.

Councilman Greenlee.

Just one last thing I meant to ask you, Commissioner. I guess I'm not asking for a comment. I guess I'm making a speech. But it says in your testimony the creation of a special class of real estate taxpayers. Aren't they special now because they're not getting a basic service? COMMISSIONER KAMMERDEINER: But some are and some aren't, and so -- (Applause.) COMMISSIONER KAMMERDEINER: -- 64 3/19/07 - FINANCE - BILL 060052, ETC. with the state Constitution, it has to be uniform across everyone who meets the same definition, and the only definitions that have been sanctioned via the Constitution involve income, poverty. There are a couple of specific things that I mentioned in the testimony that are in the Constitution, and otherwise no 10 classes have been approved for real estate tax. There have been more opportunities for creating special classes for business taxes than for real estate tax.

As I said, I guess maybe in the legal term I'm not right, but in reading real words, "special class of real estate taxpayers," I would say they are now because they're not getting a basic service. But that's just me. Thank you. COMMISSIONER KAMMERDEINER: It is from a legal perspective.

Thank 65 3/19/07 - FINANCE - BILL 060052, ETC. you. Are there further questions? Councilman Kenney -- Councilman O'Neill. I'm sorry.

That's all right, Madam Chair. I just want to emphasize my support for -- Councilman Goode and I were just talking at sidebar about what Councilman Kenney then started talking about, which is I believe what happens in most jurisdictions is, there's a reimbursement or a contribution towards, depending on the level of service the local condominium association wants, recognizing the burden that's lifted off of the municipality, the intricacies and differences between each building in pick-up processes as opposed to normal homes on the street that are all the same, the City does. And all these companies that do their pick-up at condominium associations all over the country have to learn, and it takes a 66 3/19/07 - FINANCE - BILL 060052, ETC. while, I'm sure, to learn each condo's nuances. Why can't we just do that? It's cheaper. We don't get into all this. I mean, fortunately, most of the people that got paid for all these opinions are working for us in the Law Department. But special classes of taxpayers. I mean, it's a municipal responsibility. We're meeting that responsibility in a taxpayer-friendly way but also a condominium-friendly way. So I hope we can get there and get there in a hurry. Thank you.

Madam Chair, just one more comment.

Certainly. Councilman Kenney.

I agree with everything all the colleagues on the Committee have said and I appreciate your allowing me to have comments, although I'm not a member of the Committee formally. 67 3/19/07 - FINANCE - BILL 060052, ETC. I think this bill is important as a mechanism to get to where Councilman O'Neill and Councilman Goode were talking about, and, that is, I don't want to be in a position where we say, Let's hold the bill and then we'll see if we can negotiate a reimbursement, because that's not going to happen. I'd like the bill 10 to be a vehicle for discussion so that we may be able to get to some semblance of reality here. Two issues that you raise. One, I don't know who is going to challenge this other than the City on the uniformity clause part of it. I don't know of any normal residential homeowner who gets their trash picked up that cares that somebody else is getting an equal service. The condo people and the co-op people certainly aren't going to challenge it. The only entity that challenges under uniformity would be the City. So if they don't challenge it, it's not going to be challenged. 68 3/19/07 - FINANCE - BILL 060052, ETC. And on the other issue is when it comes to access to the condos, the reason -- your testimony said that very few condominium associations have taken advantage of it. There's a reason for that. There is all kinds of civil liability issues that go with the insurance covenants, that the trucks got to come on the property and that -- I mean, Councilman O'Neill said the system of trash collection now in condos and co-ops are in place. Why do we want to recreate the wheel at I believe a more expensive cost? And I don't want the record to bear the fact or portray the fact that somehow the condo people are refusing the City service. They're not refusing the City service. Their insurance companies won't allow the City to come onto the property and collect. They have all kinds of liability issues. So their hesitance on accepting the service is not one of just dismissing it. There's real civil liabilities there how 69 3/19/07 - FINANCE - BILL 060052, ETC. it relates to City employees on their property. I mean, there's a whole mess of issues that can easily be resolved by a negotiation using this bill as leverage on the tax credit to just do the reimbursement we've been asking for for eight years or seven years, six years, in there. That's all. Thank you.

Thank you. Before we continue, we announce that the Committee on Public Property and Public Works for Bill No. 060111 is likewise recessed subject to the call of the Chair. This was a companion bill to the biosolids legislation. Again, the Public Property and Public Works Committee with regard to Bill No. 060111 will continue its hearing subject to the call of the Chair. Thank you. Are there further questions with regard to this bill? Anyone else 70 3/19/07 - FINANCE - BILL 060052, ETC. who would like to testify? Yes, sir.

Gary Krimstock again, Madam Chairperson. I would like to just make a couple of comments in regard to the questions and the comments that have been raised. First of all, with regard to Councilman O'Neill's statement, it is a fact and you are correct, sir, that many other municipalities across the country in other cities have resolved this issue by reimbursement and do not provide the service as a municipality because of all the various complicating issues that Councilman Kenney has raised. In addition to the City vehicles and equipment and personnel needing to come onto private property, the condominium owners, as Councilman DiCicco said, would need to have new facilities, new compactors, storage that is just not there to have this trash stored for a week. You'd need to refrigerate it. 71 3/19/07 - FINANCE - BILL 060052, ETC. And, Councilman DiCicco, I happen to have the calculation. I did it before today's hearing. I happen to have the calculation that if Society Hill Towers put their trash out on the street for one week on one day, the amount of trash that the City collects from the average household once per week, the City collects up to 240 pounds per week from an average household. At Society Hill Towers it would be over 85 tons of trash on the streets. So we may need more streets and curbs. The other point is, with regard to the economics, we are talking about the City saving money by this bill. We're talking about spending less money. The City will spend less money with this bill, whether it be a reimbursement or tax credit, than they will by picking up the trash. Even if they could and would do it properly and effectively to serve these households, it would be more expensive than under this bill. 72 3/19/07 - FINANCE - BILL 060052, ETC. Thank you.

Let me ask a final question, and, that is, we understand you've been to court and that this is cheaper, but how does this reconcile with other homeowners who might want to get a tax credit? Is the complaint that the City was not in fact picking up enough trash? How does this relate to recycling services and how does it relate to what other homeowners in the City may request? COUNCILMAN DiCICCO: Other homeowners, as are most of us are, I believe, we get a basic City service, whereas the people who live in the vertical buildings are not provided that service on a weekly basis. So if whatever the City's budget is for collecting trash, if you divide it by the 500-and-something households in the City, it comes to whatever, $150 a year, but people in the condominiums are not benefiting by that tax money that they're 73 3/19/07 - FINANCE - BILL 060052, ETC. paying into the General Fund by virtue of the fact they don't get any trash pick-up.

Let me ask one final question. COUNCILMAN DiCICCO: I don't know if that's your question.

According to the Commissioner's testimony -- you all forgive me for asking these questions. I don't try to offend you. According to the Commissioner's testimony, the City offered to make the collection, but it was not accepted. COUNCILMAN DiCICCO: For the reasons that have just been pointed out, especially I think by Councilman O'Neill and Councilman Kenney. In most cases, it's either physically impossible to do and that the systems are set up where the trash is contained in a certain area of the building and you would have to get the City sanitation truck to go on the 74 3/19/07 - FINANCE - BILL 060052, ETC. premises. There are liability issues with that. And they would have to hold the trash for a week. I think they would have some serious health violations. I mean, it could go on and on and on. It's just not the practical way. And as Mr. Krimstock reported based on Councilman O'Neill's question, there's other municipalities that have done the same thing. If you took all these buildings, as Ms. Bacall said, and you laid them down horizontally, we would be picking up their trash once a week.

Thank you.

Thank you.

Certainly. Yes?

Joan Rosenfeld. May I add something as a manager of associations? We have trash pick-up at Society Hill Towers and our other vertical buildings six days a week. So 75 3/19/07 - FINANCE - BILL 060052, ETC. that we are always holding two or three. We move them away from the compactor and then we're loading more. So other than Sunday, we're picking up trash. We also do recycle in our buildings, and that is picked up in different separate containers. So, one, it's a logistical issue. We just have a huge volume. And as was eloquently said by Councilman DiCicco, where can you store all of this without having other sanitation problems? The offer that was made by the City was to have a particular kind of receptacle that must be put out on the street. Well, because the trash trucks in the City are larger than the private haulers, so we couldn't take advantage of it, A, because we couldn't save the trash for a whole week and, B, there wasn't enough room on the street to put it out, and that would have been a terrible eyesore as well as -- I hate to say the word -- a rodent problem if you really lined up all those dumpsters. So it 76 3/19/07 - FINANCE - BILL 060052, ETC. wasn't a solution to the problem. It was a piece of a solution that was not viable or could be effective for associations.

Thank you for the clarification. Councilman Greenlee.

Yes. If I could just add, Madam Chair, if my memory serves me, the arguments against the City picking it up back in 2001 was the City's arguments. They were the ones who were saying they couldn't do it for the reasons that now the condo people are saying. And that's, again, from my memory, why the whole idea of tax credits or reimbursements was brought up. So this is obviously not something new. This was something that has been discussed for a long time, and, again, it just seems to me to be the more sensible way of doing it. Thank you, Madam Chair.

Thank you. 77 3/19/07 - FINANCE - BILL 060052, ETC. Further questions? (No response.)

Thank you very much. Thank you all. We will now consider PGW bills. While the Clerk reads the title of the bill, we will ask Janet Parrish, Executive Director of the Gas Commission, and Bill Gallagher to come forward. Thank you.

Bill 070150, an ordinance amending Bill No. 060378, entitled "An ordinance approving the Fiscal Year 2007 Capital Budget providing for expenditures for the capital purposes of the Philadelphia Gas Works, including the supplying of funds in connection therewith, subject to certain constraints and conditions, and acknowledging receipt of the Forecast of Capital Budgets for Fiscal Years 2008 through 2012 by approving a revised Capital Budget for Fiscal Year 2007.

Thank 78 3/19/07 - FINANCE - BILL 060052, ETC. you very much. Thank you for your patience. Good afternoon.

Good afternoon, Chairwoman Blackwell and members of the Committee. I'm Janet Parrish, the Executive Director of the Philadelphia Gas Commission. Seated to my left is William Gallagher, the Director of Budget Reporting at the Gas Works, who is here today on behalf of Mr. White, who submitted written testimony in support of the bill. Rather than go through the testimony in detail, if we may, I have submitted in lieu of written testimony a copy of the Gas Commission's resolution 19 in this matter setting forth our recommendations to Council which are embodied in this bill, 070150. Simply said, we've recommended an amendment of the approved Fiscal Year 2007 PGW Capital Budget in the amount of $765,000. It's a relatively small amount, but it does need 79 3/19/07 - FINANCE - BILL 060052, ETC. to be done and approved by Council, with two minor constraints; that is, that the funds that we are recommending be added to the budget be limited strictly to the purposes of those three line items we recommend the addition of. We're asking that you report the bill out of Committee with a favorable recommendation and a suspension of the rules so first reading may be had at the next session of Council.

Thank you very much. Are there questions? Councilman O'Neill.

Thank you, Madam Chair. Mr. Gallagher, I'm always supportive of capital improvements for the Gas Works because it usually means replacing all lines that could be very dangerous to a whole lot of people and much more costly to the Gas Works in the long run, but I also from time to time 80 3/19/07 - FINANCE - BILL 060052, ETC. have expressed my concern at some past habits of the Gas Works where you would come to us for Capital Project approval and -- or Capital Budget approval and had already spent much of the money before you came. I don't think that's been going on for a while, but could you put on the record whether what we're voting on today is proposed to be spent or whether it's already partially spent.

That is correct. None of the funds have been spent on this. We're waiting for approval so we can start the projects.

Thank you. I just wanted to clarify that. And good luck.

Thank you.

One final question. Were these costs arrived at through competitive bid?

This is an engineering estimate at this point in 81 3/19/07 - FINANCE - BILL 060052, ETC. time by our engineering department and it will be put out to a subcontractor and they'll bid on it. It's just an estimate at this point in time.

Thank you. Further questions? (No response.)

Thank you very much.

Thank you.

Thank you.

Thank you very much. The Clerk will now read the title of Bill No. 070091 authorizing Sovereign Bank as a City depository. We ask Mr. John Nacchio, City Treasurer, to come forward.

Bill 070091, an ordinance amending Chapter 19-200 of The Philadelphia Code, entitled "City Funds - Deposits, Investments, Disbursements," by amending Section 19-201, entitled 'City 82 3/19/07 - FINANCE - BILL 060052, ETC. Depositories,' by authorizing the City Treasurer to deposit funds in Sovereign Bank, under certain terms and conditions.

Thank you very much. Please identify yourself for the record and make your testimony.

Sure. Good day, Madam Chairman and members of the Committee on Finance. I am John Nacchio, the City Treasurer for Philadelphia. I appreciate this opportunity to testify before you on matters related to City depository financial institutions authorized to accept City deposits. In this proposed legislation, Sovereign Bank is being added to the existing list of nine authorized depositories. In the information search by my office, we found on their website text indicating that there are partnerships of many state governments within its footprints in which the bank provides access to affordable capital for growing 83 3/19/07 - FINANCE - BILL 060052, ETC. businesses. In addition, that Sovereign has received a Community Reinvestment Act, CRA, rating of outstanding from the Office of Thrift Supervision, OTS, from its most recent CRA exam. However, in the information submitted to the Treasurer's office for review, Sovereign Bank did not disclose its total presence in Philadelphia or the nature of its reinvestment in the community. This bank meets the financial criteria required by The Philadelphia Code which requires depositories, one, to have at least $100 million in assets; two, been in business for the last five years; three, been profitable for the last two years; and, four, are favorably insured. Also based on information available, there appears to be the banking capacity to meet the various business needs of the City based on its asset size of $90 billion. Although, this assessment is conditional in that Sovereign Bank would need to meet the 84 3/19/07 - FINANCE - BILL 060052, ETC. criteria requirements to maintain annually its depository status as set forth in Chapter 19-200 and 17-104 of The Philadelphia Code. There is no objection in a revision of The Philadelphia Code to add Sovereign Bank as an authorized City depository. That concludes my written testimony.

Thank you very much. Are there any questions for the Treasurer? (No response.)

Thank you very much.

Thank you.

The Clerk will now read the title of Bill No. 22 060052 dealing with Wachovia Bank.

Bill 060052, an ordinance amending Section 19-201 of The Philadelphia Code, entitled "City 85 3/19/07 - FINANCE - BILL 060052, ETC. Depositories," by revoking the depository status of Wachovia Bank, and revising the list of City depositories, under certain terms and conditions.

Thank you very much. Jonathan Stein and Donna --

Madam Chairman, we would prefer to --

Sorry. Wachovia. We'll call on Wachovia Bank first. Bill Knott, Executive Vice-President, Philadelphia Regional President; Jonetta Allen, Senior Vice-President, State Government Relations; and Jeff Gish, Senior Vice-President, Community Relations. Thank you very much for your patience. We welcome you. Please identify yourself for our record and begin your testimony.

Good afternoon. My name is Bill Knott and I'm the Executive Vice-President responsible for financial 86 3/19/07 - FINANCE - BILL 060052, ETC. services activities at Wachovia in Philadelphia. We value our relationship with the City of Philadelphia, and I want to start by apologizing for the way we showed up at the January 31st hearing. As I said, we value the relationship and it was not our intention to show any disrespect to this Committee or to members of the City Council. We understand, in retrospect, how some may have interpreted our actions that way. We're deeply sorry for that. The relationship has been rewarding to Wachovia and we believe economically beneficial to the City as well. With me are Jonetta Allen. Jonetta runs our state government relations. She's been with the bank 12 years. I think most of you have had the opportunity to meet Jonetta. She took over in May of last year our state government relations function. Jeff Gish joined us in 87 3/19/07 - FINANCE - BILL 060052, ETC. September, and Jeff is responsible for our community relations. I want to reaffirm today our desire to be a key ingredient in the financial well-being of residents in the City of Philadelphia. We have a longstanding record of community service in Philadelphia and we're proud of that legacy. We intend to continue to support our commitment to the City of Philadelphia through affordable lending solutions in low- and moderate-income areas, to providing small business loans to Philadelphia entrepreneurs in low- and moderate-income areas, and to expanding our financial literacy programs to more participants throughout Philadelphia. We're here today to respond to questions about Wachovia, its business policies and its commitment to the community. Thank you.

Thank you very much. 88 3/19/07 - FINANCE - BILL 060052, ETC. Councilman Goode.

Thank you, Madam Chair.

Certainly.

Good afternoon, Mr. Knott, Ms. Allen, Mr. Gish. Let's start with your January 31st testimony offered by Jim Eisenhower in which he testified on both Bills 060052 and 060939, which has since been enacted into law. Mr. Eisenhower chose to testify on both bills. Mr. Eisenhower chose to testify on both bills and respond to potential testimony by Community Legal Services and in that testimony addressed the issue of Community Reinvestment Agreements and whether Wachovia enters into Community Reinvestment Agreements or not. Can you tell me for the record whether Wachovia enters into Community Reinvestment Agreements in writing and, 89 3/19/07 - FINANCE - BILL 060052, ETC. if not, why not?

Certainly. Thank you for the question, Councilman Goode. We have chosen to move to a strategic focus. We chose to begin moving to a strategic focus for a community as a whole and not enter into specific community agreements. We believe that community agreements, for the most part, are individual-organization focused and don't allow the breadth of the services to be allocated throughout the entire community. That's why we stopped entering into community service agreements. Having said that, we partner with community organizations that meet our strategic goals and initiatives. Currently, we have about 260 community partnerships that are outstanding that help us meet those strategic goals. In addition, we have something called Wachovia volunteers for our employees. We pay for four hours of community 90 3/19/07 - FINANCE - BILL 060052, ETC. service work for those employees --

Mr. Knott.

Yes, sir.

You know that's not what this discussion is about. This discussion is about your lending performance, and in the discussion of your lending performance is also not just about whether you enter into Community Reinvestment Agreements with individual communities, individual organizations. It is about whether you enter into Community Reinvestment Agreements even on a citywide basis or in terms of the market. It is not uncommon for a bank or banks, other than your bank, to come into a market, particularly when they are acquiring another bank, when they are merging with another bank -- in fact, some of your predecessors did it -- to come into the market and to negotiate a Community Reinvestment Agreement about how that particular financial institution 91 3/19/07 - FINANCE - BILL 060052, ETC. plans on servicing that particular market. So this is not just a discussion about whether you will negotiate a Community Reinvestment Agreement with one particular group or one particular section of the City. The issue is whether you actually have a policy within Wachovia that you do not negotiate Community Reinvestment Agreements at all.

Councilman Goode, we've done multiple acquisitions and, to the best of my knowledge, we have not entered into community --

Do you have a policy against entering into Community Reinvestment Agreements in writing?

We do not.

You do not have a policy against entering into Community Reinvestment Agreements in writing?

No. 92 3/19/07 - FINANCE - BILL 060052, ETC.

Would you entertain entering into a Community Reinvestment Agreement within this market if you felt that those that you were negotiating with represented a broad enough coalition of community stakeholders?

Councilman, would we be willing to sit down and converse and talk to those institutions or individuals? Yes.

I'm not asking you to sit down and talk to any specific groups. We're still talking from a policy standpoint in terms of how you plan on addressing this marketplace. Your predecessors chose to negotiate Community Reinvestment Agreements. Obviously when Wachovia came into the market, for whatever reason, it decided not to negotiate a Community Reinvestment Agreement in writing. I won't even get into why that was. Instead, what I will say in addition to 93 3/19/07 - FINANCE - BILL 060052, ETC. whether or not you have a policy against it, if you don't, are you willing to negotiate with a broad enough representation of community stakeholders and discuss with those stakeholders your lending performance within this market?

Are we willing to -- and I don't want to go ahead and miss your point. We have filed a strategic plan with the City in June of last year relative to our overall focus within the City of Philadelphia. Where we find that community organizations marry up to that plan that was filed, we're willing to work with them in any way. Are we willing to go ahead and put something in writing? We've got 260 community organizations today that we have not found any need to put --

Mr. Knott, I am extremely familiar with how Community Reinvestment Agreements have worked within this marketplace and within other marketplaces. I'm talking specifically 94 3/19/07 - FINANCE - BILL 060052, ETC. whether you're going to utilize that tool. If not, just say you're not.

Councilman Goode, I don't see us utilizing that tool because, again, my belief is they're too organization focused and centric and don't give us the breadth that we're looking for.

Mr. Knott, I'm talking about the practice of using Community Reinvestment Agreements nationwide. I'm not talking about any specific proposal that has been given to Wachovia here locally. What I'm talking about is a tool that is used generally when a financial institution comes into a marketplace. Your predecessors did it. They do it in other jurisdictions. I'm asking specifically are you against Community Reinvestment Agreements?

Yes, sir, as a matter of policy.

Okay. And in lieu of a Community Reinvestment 95 3/19/07 - FINANCE - BILL 060052, ETC. Agreement, have you proposed a strategic plan that you think does what it needs to do instead of the Community Reinvestment Agreement?

We followed a strategic plan that I believe you're familiar with. Is it everything we would like it to be? No. Will we continue to work harder to achieve or exceed those goals? Yes, sir.

You're familiar with past studies done by the National Community Reinvestment Coalition and commissioned by this Council that show Wachovia doing very well in terms of home improvement lending and home refinance lending, but doing not so great in terms of home mortgage lending and small business lending, particularly as it relates to the percentage of that lending to African-Americans, to Latinos, to low-income people.

Yes, sir.

And does 96 3/19/07 - FINANCE - BILL 060052, ETC. your strategic plan deal with those disparities as identified within that report or those reports?

Councilman Goode, Jonetta Allen. If I could address that question. Affordable mortgage lending is part of that strategic plan, but specifically the question that you're asking around home purchase financing is where we were underperforming in comparison to our competitors, and we have taken a look at that. One of the things that we do recognize and we recognized even before these numbers were before us was that our mortgage business needed to be more robust. And you may be familiar with our recent affiliation with Golden West Financial. It is part of that affiliation we're taking on a segment of our business where we're underperforming in that particular loan category not only in this market and not only to African-Americans. And referring to the numbers 97 3/19/07 - FINANCE - BILL 060052, ETC. that were provided by NCRC, just to illustrate the case in terms of our being competitive with that product, when you look at the loans accepted -- applications accepted to the loans originated in comparison to our competitors, our rate was at the 43 percent as compared to 71 percent of loans closed. We recognized --

Ms. Allen, you know perfectly well that's not what we're here to talk about today.

Yes, it is.

No, no. 16 What we're here to talk about today is whether your strategic plan addresses disparities as disclosed in the NCRC studies.

Our strategic plan does include home --

Does it address those disparities?

Yes, it does.

Because the 98 3/19/07 - FINANCE - BILL 060052, ETC. next thing I'm going to ask you is, what are your new numbers as compared to your old numbers.

Our new numbers for -- we have not received the 2005 data.

I can speak to the first six -- excuse me. I can speak to the first six months of our --

Please identify yourself for our record.

Oh, I'm sorry. Thank you. Jeff Gish, Community Relations Executive with Wachovia. In the first six months of our strategic plan, which began July 1, 2006, we originated over 323 small business loans, providing over $27 million in the first six months of that plan, and that is at 108 percent of our plan goal to date. And in that first six months as well, we've provided 1,300 --

Mr. Gish, what percentage of those loans were under 99 3/19/07 - FINANCE - BILL 060052, ETC. $100,000?

One moment. I can tell you.

That's what the NCRC reports told us.

Now, of course, in the first six months of our plan, we do not have the spread peer data because that won't be available for some --

I'm asking simply about Wachovia. What percentage of your small business loans were under $100,000?

I have that, but it's not on this immediate sheet. Is that something I can get back with you, Councilman Goode?

Absolutely not.

Okay. If you'll give me one moment, I'll find that number for you.

Councilman, while he's looking for that, one of the 100 3/19/07 - FINANCE - BILL 060052, ETC. people --

I'm only interested in the numbers.

Okay.

There are about five or six numbers I'm going to ask for, and that's going to tell me everything I need to know today.

Okay. (Pause.)

Can you repeat the question, Councilman Goode, so I make sure I give you the right --

What percentage of small business loans were under $100,000?

That would be 60 percent.

So that is actually a decrease from 2004; is that correct?

I'd have to get the 2004 numbers to compare.

2004 you 101 3/19/07 - FINANCE - BILL 060052, ETC. were far below the marketplace at 73 percent. Actually, in 2004, there were about 22,000 small business loans made in the City of Philadelphia. Over 20,000 of them, or roughly 90-some percent of them, were under $100,000. Part of the reason for your poor ranking in terms of small business lending is because you only came in at around 70 percent, and now you're telling me that based upon implementing your new strategic plan, you're even lower, at 60 percent.

Well, there are some compensating factors that I'd ask to be taken into consideration. When looking at those numbers -- and this was noted as part of the NCRC study and in our comments to NCRC after their release of the data, and that was the fact that a large number of the loans that we do --

Mr. Gish, I'd rather move on and just ask for more numbers.

Well, if I could 102 3/19/07 - FINANCE - BILL 060052, ETC. just provide some context around the two issues.

The context of this is supposed to be whether your strategic plan addresses disparities as disclosed in the NCRC studies. There's no need for any interpretation of anything. We can just look at the numbers. What percentage of small business loans were done to small businesses with less than a million dollars in annual revenue?

Councilman, we do not that information for 2005 in front of us.

I don't understand how you could not have that information.

Councilman Goode, we have the numbers in terms of overall production. We don't have the breakdown to the degree that you're asking for today in those -- 103 3/19/07 - FINANCE - BILL 060052, ETC.

That's what the NCRC study addressed. That's what your strategic plan is supposed to address. You said in your testimony and other comments that your strategic plan does address those disparities. I'm simply asking for the numbers. For the one measurement so far, we see that in 2004 the market gave over 90 percent of its loans to businesses that were receiving loans of $100,000. Wachovia only gave 70 percent of the loans, roughly 70 percent of the loans, in 2004 and since that time in 2005 it fell. Another key indicator that I'm, of course, looking at is the amount of loans to businesses with revenues with less than a million dollars. That's a key indicator that anybody would look at and that's a key indicator that you would expect me to ask about and that's a key indicator that you should have prepared for if you actually came here to discuss 104 3/19/07 - FINANCE - BILL 060052, ETC. the numbers.

Regretfully, we did not come with those particular numbers. We came prepared to discuss the percent originations in low- and moderate-income areas and geographies, and I could readily provide you that data, but we didn't --

So if I begin to ask you about your denial disparity ratios for home mortgages, you probably don't have that either.

No. I have that data.

Okay. What is your denial disparity ratio to African-Americans for home mortgages?

In 2004, that was 1.91, and in 2005, it was 2.14.

Aside from the fact that I can speak to the 2004 number, the NCRC report says your denial disparity ratio was 2.45. Nonetheless, even looking beyond that, what you said 105 3/19/07 - FINANCE - BILL 060052, ETC. was in the year in which you ranked dead last in terms of providing equitable access to home mortgage to African-Americans, since that time, your denial disparity ratio has actually gone up. In other words, you are more likely to deny an African-American a home mortgage than when you ranked dead last in the last NCRC study.

Councilman, I do stand corrected. I was looking at the 2003 number -- oh, that was the summary, and you are correct that in terms of home purchase, it was 2.45, but the number that I gave you previously was for overall all home-related loans.

I'm asking your denial disparity ratio specifically for home mortgages to African-Americans.

Purchase, refinance or both?

No, no. 24 Just home purchase.

Home purchase -- now 106 3/19/07 - FINANCE - BILL 060052, ETC. wait a minute. That's purchase and refinance.

Mr. Gish, no 5 disrespect, but this is what you do for a living, right?

Yes, sir.

Okay. Go ahead.

Absolutely, but certainly there are lots of different dissections of the numbers, and that number was 2.04 for 2005.

It was 2.45 for 2004?

Yes.

Yes. It was an improvement.

What is your denial disparity ratio for Hispanic for home purchase loans?

Hispanic home purchase in 2004, it was 2.54. In 2005, 2.13. Again, an improvement.

But you're 107 3/19/07 - FINANCE - BILL 060052, ETC. still more than two times more likely to deny an African-American or Latino than a white person.

Our lending policies are totally transparent to race and race does not play a factor in our decisions on our home purchase lending.

Can you explain what a denial disparity ratio is?

Yes, sir. That is the ratio of denials of a minority segment to the denials of a non-minority segment.

So can you explain what your denial disparity ratio is with regard to African-Americans?

Well, as you said right there, a denial disparity ratio of 2.04 would indicate that African-Americans are denied 2.04 times more frequently than --

Almost two and a half more times.

-- 108 3/19/07 - FINANCE - BILL 060052, ETC. non-African-American applicants.

So it is a true statement that your most latest numbers that you're presenting today show that you are still two times more likely to deny an African-American or Latino a home mortgage than you are a white person; is that correct or is that not correct?

That is correct, but that is not a solitary Wachovia issue. I would point out that all lenders in the Philadelphia market, the denial disparity ratio was 2.28, and we did perform better than all of the peers -- all of the mortgage originators in the market in the past year.

I thought you said you didn't have the numbers for your competitors in the market.

For small business.

For small business we do not have that data yet. We do have the 2005 data for home-related lending. 109 3/19/07 - FINANCE - BILL 060052, ETC.

And what's the overall denial disparity ratio for home purchase for African-Americans?

Please repeat the question.

What is the denial disparity ratio across the board for the entire market for home purchases?

Home purchases, all lenders, African-American, 2.28, and we're at 2.04.

And Latinos?

2.13, and the market is at 2.02. Certainly we would want to --

So your statement to me -- and I'll accept it as being fair -- is that the market itself is two times more likely to deny an African-American and Latino and that Wachovia is no different.

No, sir. What my point that I was making was that the overall market of all lenders, we are in 110 3/19/07 - FINANCE - BILL 060052, ETC. a comparable situation in relation to our peers in the industry where our denial disparity ratio is near or consistent with the market as a whole. So --

But part of the case that Wachovia has tried to make over the last year or two is that it is the highest volume lender within this market, and as the highest volume lender within this market, you could in fact shift those numbers; could you not?

Yes, sir, and we are planning to do that. And to your point of how this relates back to our strategic plan, we are putting additional focus on this, where in 2004, in 2005 when these numbers were originated, the focus was not in the proper places that it needs to be. The plan that we've submitted last summer addresses a number of issues that will not only improve our performance overall as a lender but will be able to have a positive influence and positive effect on these numbers as well. 111 3/19/07 - FINANCE - BILL 060052, ETC.

Mr. Gish, just a few more numbers I need.

Certainly.

What was your percentage of home purchase loans to African-Americans?

For 2005, Councilman Goode, that percentage is 17.22 percent.

Excuse me?

It is 17.22 percent, and certainly that is not where we would like for that to be and we --

So in the first year of the NCRC study Wachovia only offered about percent of home 17 purchase loans to African-Americans. In 18 the second year of the NCRC study, Wachovia only offered 24 percent, although an improvement, to African-Americans. Wachovia is now at 17 percent, only 17 percent of its home purchase loans to African-Americans?

In 2005, that is --

I don't have 112 3/19/07 - FINANCE - BILL 060052, ETC. any other further questions.

I would add one lighter thing. In 2005, we did acquire a wholesale mortgage operation that originates loans across the nation, and these numbers did -- when we brought those numbers in to our overall numbers, they did have an impact on that, with those being a wholesale lending relationship, and we are taking corrective action to improve that performance. Again, we're two years later than this data shows, so we are in a position of being able to better address that at this point.

You are two years beyond the 2005 numbers you just gave, but clearly you know what your 2006 numbers are.

We do not know in relation to peer and we are still scrubbing that data to ensure the integrity of it. It was submitted to the regulators on March the 1st, but we're 113 3/19/07 - FINANCE - BILL 060052, ETC. still in our data integrity review and have not received our data integrity checks back from the regulators to ensure the quality of that.

So as far as you know, your numbers are even worse.

No. I know what they are, but it's not a matter that we can make those public until we've done our thorough data integrity review.

So your numbers are better?

I'm not at liberty to say whether they were better or worse at this time because the review is not final.

Another one of the issues that was raised with regard to your lending performance was despite the fact that Wachovia does have a good branching pattern, it does have a substantial amount of branches within low- and moderate-income neighborhoods and substantially minority neighborhoods, 114 3/19/07 - FINANCE - BILL 060052, ETC. that that is still disturbing in light of the fact that the home mortgage lending and the small business lending is not being offered in an equitable way to those communities, and so there were several activists and advocates concerned about the closing of two branches by Wachovia. Can you tell me the status of those two branches?

Certainly. Later this year Borinquen Financial -- or Federal Credit Union will be occupying one of the two closed financial centers. The second, no determination has been made.

And are you in negotiation with any particular bank or institution?

We have been in discussions with another bank.

Do you care to shed any light on those negotiations?

I can't at this juncture, Councilman. 115 3/19/07 - FINANCE - BILL 060052, ETC.

In light of the fact that the most recent data that you can give us is that Wachovia only offered percent of its home purchase 6 loans to African-Americans in the latest 7 data available, don't you think that 8 there would be a particular concern of 9 this Committee about what happens to the 10 other branch, particularly because that 11 branch is in a neighborhood with a 12 considerable African-American population? 13

Councilman, first, 14 I do understand it's a particular 15 interest for this Committee. Secondly, 16 as you are aware, I believe aware, we've 17 opened two other financial institutions that are in origination to low- and moderate-income tracts at the same time that these two have closed. So we still have over 66 percent of our branches in low or adjacent to low- and moderate-income tracts.

But when someone who lives in that particular 116 3/19/07 - FINANCE - BILL 060052, ETC. neighborhood knows you've closed a branch and they hear that in 2005 you only offered percent of your home purchase 5 loans to African-Americans, they have to 6 be even more concerned about the fact 7 that there is no bank there. I mean, 8 after that community putting its deposits 9 in that bank and obviously not being able 10 to access them equitably in terms of 11 pursuing the American dream of 12 homeownership, if that bank then 13 disappears, they have to feel that much 14 more disenfranchised. 15

Councilman, in the 16 case of the two financial institutions 17 that were closed, the two branches, we have another branch that's four-tenths of a mile away from one of the branches that closed. In the other, eight-tenths of a mile. Within those zip codes there are nine federally chartered banks and 11 federally chartered banks. So there still is access to capital.

But not 117 3/19/07 - FINANCE - BILL 060052, ETC. necessarily equitable access to capital.

We'd like to believe we do it better, yes, sir.

I'll ask the question one more time for the record, although I think you've already answered it to the extent that you can answer and to the extent that you've put forth numbers. Do you know for a fact that your strategic plan is improving the credit gaps that existed in terms of home purchase loans and small business loans to African-Americans, to Latinos and to low- and moderate-income communities, to businesses with revenue of less than a million dollars a year and to those seeking businesses less than $100,000, in those areas that were identified by NCRC? Is your strategic plan actually addressing those disparities and filling those gaps and can you give me any specific statistic or number that would prove that? 118 3/19/07 - FINANCE - BILL 060052, ETC.

As you're aware, the strategic plan did go into effect in July 1st of 2006, so the numbers that I have to report to you are in the first six months. We have not been analyzing it per each individual segment in terms of minority group or income group, but I can tell you --

But that's what we asked you to do.

Well, I can provide that information to you at a --

But that is in fact what we asked you to do in submitting the strategic plan and implementing the strategic plan in private discussions and negotiations and every discussion we've had. I said I'll be fair about this. I'm going to simply look at the data and look at the numbers and look at how you're performing or not performing and whether you're improving or not improving. I'm not telling you where you should be. I'm not telling you 119 3/19/07 - FINANCE - BILL 060052, ETC. how to get there, but unless you can directly answer the question in terms of whether you have filled any of those credit gaps with regard to home mortgage lending and small business lending to African-Americans and to Latinos and to women and to low- and moderate-income neighborhoods and to smaller businesses, I have no way of knowing until we receive our next comprehensive study whether the bank still ranks as bad as it did before. And one of the things that we have agreed upon, although the City has put out to bid and accepted a bid of a firm, actually a joint venture between two groups that will look at 2005 and 2006 and give us those comprehensive numbers, one of the things that we agreed upon was that Wachovia would track it itself and be open and honest about where it's performing and where it's not. And if that's what we agreed upon and I ask you for the information -- first of all, you told me you would provide it to me on a 120 3/19/07 - FINANCE - BILL 060052, ETC. routine basis privately. That has not happened. So now I'm forced to ask you publicly. Even the last time we ran into each other, Mr. Gish, you asked me was everything okay, how am I feeling about Wachovia today. I said, I'll be feeling a lot better when you give me the numbers. Is that not what I said to you?

Something to that effect, yes, sir.

And that was at least two months ago.

And the data that we are tracking and --

But I can't feel any better about Wachovia because I don't have any new numbers to make me feel better; is that not true?

I would be glad to provide you with the data, Councilman Goode, and we do have the data and as of your end, we were running 156 percent of our plan to date on our goal. So we are exceeding our targets and what we had set 121 3/19/07 - FINANCE - BILL 060052, ETC. out to do, and I --

You're exceeding what targets?

Our targets for overall lending in low- and moderate-income census tracts as defined by our strategic plan.

The strategic plan was supposed to address disparities in the studies. I don't care what targets you set for yourself if in the end the outcomes are not that those disparities have been addressed. So what you're saying to me is that we've identified disparities, you've come up with a strategic plan, your goals for the strategic plan, you're happy with how they're proceeding, yet you can't comment on whether they have actually addressed those disparities or not. That's ridiculous. And, in fact, you mention that your strategic plan represents less loan volume than your previous lending; is that not true? 122 3/19/07 - FINANCE - BILL 060052, ETC.

Councilman Goode, can I speak to that?

Absolutely.

When we created that strategic plan, it was based on what we thought we had the ability to experience in terms of outside factors such as market demand and interest rates and other factors.

Does it represent a lower loan volume or not?

It represents a lower loan volume than what we had experienced in the past, but we will be pleased if we're able to have a demand that exceeds that commitment, and, in fact, for the first six months that we've tracked that information since --

See, I just want to be honest with this Council, that when your CEO went around throughout this Council, throughout City Hall bragging about a billion-dollar commitment and then when your CEO decided to brag about 123 3/19/07 - FINANCE - BILL 060052, ETC. over half-a-billion-dollar commitment to low- and moderate-income neighborhoods, I just want you to say for the record that what he was saying is, You should be proud of that even though we're doing less than we did in the past.

If I may --

You can spin it how you want, but it's the truth.

To put that into context, it's based on --

It's less.

We formulated that commitment based on what we thought the market demand, other factors would be. It has nothing to do --

But it is less.

It is less because we thought the market would impact our ability to have that demand.

If I understand why it's less and it's less because of interest rates and for a 124 3/19/07 - FINANCE - BILL 060052, ETC. number of different reasons, one, I'm not going to be impressed with your loan volume, because I know it's less. But then when you come back and the only numbers you say you have are about loan volume and I already know it's less but you then can't tell me the percentages as they relate to areas where you showed disparities in the past, to me you think we're stupid. You think you're going to play bigger is better, we have a higher loan volume than everyone else, when in fact I know that your commitment is less, I know you can't tell me anything about resolving any disparities that we asked you to resolve within the strategic plan.

We were not prepared today for being able to provide you data for the first six months of that commitment with respect to disparities. What we were prepared --

What did you think I wanted to know except for whether you resolved your disparities? 125 3/19/07 - FINANCE - BILL 060052, ETC.

I understand. We were prepared to provide you information about what we were doing in terms of our performance against that commitment, where were we performing better, from our perspective, in those categories where we were -- you had identified in earlier meetings as lagging behind our peers, specifically home purchase mortgages and small business lending.

Ms. Allen, what percentage of home purchase loans to women, female borrowers?

Again, I apologize for us not being prepared to be able to provide you the detail by category within those lending areas.

Once again, I'm finished.

Councilwoman Reynolds Brown.

Thank you, Madam Chair. Councilman Goode has addressed 126 3/19/07 - FINANCE - BILL 060052, ETC. the issues regarding the procedure by which once you make a decision to close down branches how you proceed with informing the community. I would like you, if you would, to please provide to the Chair your numbers around home mortgage lending and small business lending for women, if you would. And to the earlier testimony which talked about 260 community partnerships, could you just tell us how many of those or what amount of those 260 are in the Philadelphia area?

That is the number of organizations in Philadelphia County that we have had active partnership with over the past three years.

Okay. All right, then. Thank you for your testimony.

We'll provide you the information.

Please.

Are 127 3/19/07 - FINANCE - BILL 060052, ETC. there further questions? (No response.)

Thank you very much. The Chair now recognizes Jonathan Stein and Donna Bullock, CLS. After CLS we will have Ronald Johnson, National Coalition of Blacks for Reparations in America.

Good afternoon, Madam Chairwoman Blackwell. I'm Jonathan Stein, general counsel at Community Legal Services, joined by my right, Steven Buvel, who directs our Community Economic Development Unit at CLS. We're here on behalf of a coalition of organizations across the City interested in ensuring that banking institutions are accountable and responsible to their communities. First we'd like to thank each of the Councilmen in the Chambers here -- Madam Chairman Blackwell, Councilman Goode, Councilman Ramos, Councilman Kenney, Councilman 128 3/19/07 - FINANCE - BILL 060052, ETC. Greenlee, Councilman DiCicco, Councilwoman Blondell Reynolds Brown -- for supporting so enthusiastically and unanimously the ordinance that is now law that requires, for the first time, City depository banks give the City and City Councilmembers prior notice before a branch closing. The City of Philadelphia may be the first city in the nation to have such an ordinance, and we really appreciate the quick action and response that City Council has made to this issue generated by the behavior of the stealth closings that we've seen of Wachovia Bank that brought this ordinance into fruition. I think what that ordinance is is essentially a message to the banks that it's not business as usual, that banks must be held to standards of accountability of community responsibility, Wachovia as well as other banks in the City. Since our prior January 31st 129 3/19/07 - FINANCE - BILL 060052, ETC. testimony, I wanted to just update Council on what has transpired. The federal banking agency of the Office of the Controller of the Currency, OCC, held one of its first-ever hearings in recent times about the Wachovia branches hearing held February 27th in North Philadelphia, which focused not only on the branch closings of Wachovia but also on their broader practices, the lending practices that Councilman Goode and you have brought to air today, inadequacies in small business lending and home purchase mortgage lending, as well as the lack of the bank's commitment to fight predatory lending. They have refused to essentially engage and agree to a proposal to have a product that could be a rescue loan for those losing their homes from predatory lenders. They've refused to engage us with initiatives to deal with home repair issues in the City, et cetera. You have asked about the two 130 3/19/07 - FINANCE - BILL 060052, ETC. particular closings at Front and Allegheny and I think we applaud the effort that one of those -- the Front and Allegheny branch will be going to Borinquen Federal Credit Union for one dollar, but to the surprise of all of us, when Wachovia earlier in the year said that, We're going to keep these two branches at Front and Allegheny and Germantown and Lehigh, the other branch, which they didn't mention this afternoon, that they were going to keep those two branches in-house so they can transfer them to another banking institution, although they've done that for Front and Allegheny, when it comes to Lehigh and Germantown, on February 27th, to the surprise of everyone, Mr. Gish, who is here, announced to everyone that they were essentially reneging on an oral commitment they made to keep that branch in-house so that they could transfer it in a way as they did with Front and Allegheny to Borinquen and instead of 131 3/19/07 - FINANCE - BILL 060052, ETC. going down that path, which they said to a number of organizations they would do, they said, We're reversing ourselves, we're going to give the Germantown and Lehigh branch to a realty organization to sell to the highest bidder. And so there's a real unknown there as to what Wachovia will really do with that site. It's in North Philadelphia.

It serves a low-income and minority community, and we know -- the only fact we know is that they've reneged on an oral commitment they made, just made two months earlier, that they wouldn't give this property at Germantown and Lehigh to their realty company but would keep it in-house, and that's something that unfortunately the witnesses you just heard did not directly respond to. The only thing you've heard from them on branches was that that Germantown and Lehigh branch is in negotiation. It's now mid March. They closed in early December. They knew they would be closing it last summer. It's 132 3/19/07 - FINANCE - BILL 060052, ETC. now empty with no bank there. And they said that they have two new branches in low- and moderate-income areas. Well, they didn't give you the addresses of them, did they? One of them, we believe, is at 21st and Market at the Commerce Square building. Now, on someone's map, that may mean low- and moderate-income area, but in our maps, as we can walk there in three minutes, I don't think a downtown business area at 21st and Market can be considered a low- and moderate-income area. And so that's what they're telling you in this sort of game of where branches are and how they're described. The last time they were here, they said, We have branches in and adjacent to low- and moderate-income areas, which is another stretch they've used in language, which is not quite in the language that the federal agencies use. They don't talk about adjacent. They talk of being in an area. And we 133 3/19/07 - FINANCE - BILL 060052, ETC. don't really consider -- I don't think anyone who has lived in the City for any number of years would consider 21st and Market to be a low- and moderate-income area. If I could just respond directly to what we heard this afternoon. After the direct question to Mr. Knott about Community Reinvestment Agreements from Councilman Goode, I think we heard finally an answer, a direct response from Mr. Knott saying that, Yes, we are against Community Reinvestment Agreements as a matter of policy. Now, that means they will not enter into any written agreement with any groups or a coalition of groups so that what they commit they can be held accountable to. They can issue press releases. They can issue, quote, plans. They could distribute many copies of that on many desks in City Hall, but when it comes to something that they can really be held accountable to, including in a court of law, they stop 134 3/19/07 - FINANCE - BILL 060052, ETC. short of that. If they want to hold someone who takes a loan from them accountable so they can sue somebody or foreclose on their house, you can bet that from the get-go they're going to ask for a written agreement, not just a smile, a press release or a plan. So there's a real double standard they're holding the community to here. And we are not one organization. We're representing a coalition of groups. They include Action Alliance of Senior Citizens; Eastern Philadelphia Organizing Project; Ceiba, which is a coalition itself of five Latino organizations; the Philadelphia Unemployment Project; NAACP; Women's Community Reinvestment Project and others, including suburban groups. So we have presented ourselves to Wachovia not as a single organization but as a regional coalition seeking changes in their practices that not only affect one block, they affect the entire city and 135 3/19/07 - FINANCE - BILL 060052, ETC. region. So they have made a strategic plan decision not to engage, not even to talk, because Mr. Gish called me up two weeks ago and said, We're no longer going to talk to you. We'll talk to an individual group, to one of their, quote, partners, an individual partner. They won't talk to a coalition. And they certainly made clear this afternoon they won't put anything in writing after months of maybe talking negotiations.

That is not a responsible, accountable bank, and I think this City Council can hold them to a standard of accountability, which includes negotiating in good faith with a coalition that's responsible and entering into a written agreement when something is resolved. And we've been open to negotiations for months now and we've begun them, but every month or so Wachovia says, We won't talk to you anymore. And we've heard that for the 136 3/19/07 - FINANCE - BILL 060052, ETC. second time a couple of weeks ago. I really need not go into other aspects. I think Councilman Goode has found that either this bank has no 6 answers to questions and they knew -- they've had two months -- they've been on notice for many months about what questions this Council is seeking from them, and for them not to show -- and, remember, they continued an appearance. They've put off coming to this Council. But they finally come today. They bring someone from North Carolina, they bring their Regional President, and yet they don't have answers to very basic questions. And these questions really go to the heart of whether they are being fair and responsible to minority communities, to low-income people in the City. And we see at least in two major areas, of home purchase mortgage lending and in small business lending, that they are failing. And you have to wonder they're not putting anything forward to 137 3/19/07 - FINANCE - BILL 060052, ETC. show progress despite criticism and they're saying, I guess, trust us or we're big, we're the largest bank in the City, so we can do anything we want. And, unfortunately, in the state of the law that often bankers have written at the federal level, at the local level at least we have a City Council that we have to take our hats off to, is acting extremely responsible here and reasonable, too. )

And I think you've acted respectfully and reasonable to this bank. You've asked reasonable questions. They haven't come up with answers, or at least some of the answers they've come up with show they're going backwards, not forward. And I think it's time to say to this bank you're fed up. There's a time when a bank has to understand that there are consequences to not being direct with a legislative body and not, more importantly, making progress on how it 138 3/19/07 - FINANCE - BILL 060052, ETC. treats low-income and minority people, and I think that time is now, and we urge the Council of this Committee to support Councilman Goode's bill to de-list or de-authorize this bank as a City depository. Thank you. (Applause.)

Thank you very much. Tell Donna Bullock we miss her. Obviously you are not she.

No, I'm not.

Councilman Greenlee.

We miss her, too.

Mr. Stein, just one quick question. What's been your experience with other banks? Is there a general rule of thumb? Have other banks entered into agreements? Have others not entered into agreements?

Well, that's a good question.

Or have 139 3/19/07 - FINANCE - BILL 060052, ETC. you tried to get --

Well, the history we have is with essentially the Wachovia predecessors. I mean, in 1998, we entered into -- a number of groups, the state Attorney General had one agreement, the EPOP organization had another, the NAACP, Action Alliance had another, and entered into written agreements after negotiation with First Union Bank, and there are other agreements that were held with other banks earlier than that. First Union is essentially Wachovia. They had a name change about four, five years ago. So essentially the predecessor bank of Wachovia entered into agreements in '98, and we don't see any reason why they couldn't enter into an agreement now.

I guess you answered it slightly different than what I think I was asking. Other banks, have you tried or are you aware of other groups -- maybe there hasn't been these 140 3/19/07 - FINANCE - BILL 060052, ETC. attempts to enter into agreements with other banks, or has there never been the need to do so that you saw?

In the past, there have been agreements. There's nothing pending other than these requests of Wachovia right now.

I know right now, but I'm just -- what I'm trying to get on record, is there a history here? I mean, is Wachovia being completely different than other banks? Are there banks that as far as written agreements, there's some that do it that way, there's some that do it another way? Do you know where I'm going with this?

Yeah. I mentioned three agreements that were entered into in 1998 with First Union. Before that, I believe -- and my colleagues could probably refresh my memory -- that with IVB there was an agreement earlier. They often took place around a new bank emerging in the City or a merger 141 3/19/07 - FINANCE - BILL 060052, ETC. happening or something like that. And so there is a history, including in other cities as well.

So First Union would be the example that you've used?

Right.

Has there ever been an attempt -- I'm just throwing out a name -- with PNC? I don't know. Has there ever been an attempt to have some kind of agreement, or did you feel the need to do it?

We haven't represented any groups that have had an action against PNC.

I used PNC as an example. Are we looking at a situation that's very different here, or what? That's what I'm trying to get at, I guess.

Well, you have a situation where in two key areas of community responsibility, small business 142 3/19/07 - FINANCE - BILL 060052, ETC. lending and home purchase mortgage lending, you have Wachovia far off the mark from other banks. And as I mentioned in my January 21st testimony, it's not only the data that Councilman Goode and the City Council has commissioned and has before it; if you look at other indicators, like on affordable home purchase mortgage lending, the Pennsylvania Housing Finance Agency has a major affordable housing product which they make available through banks across the state. And Wachovia is the second largest bank in the state, but they rank No. 18 statewide in providing this affordable housing mortgage product to customers. And to make that real nitty-gritty and specific, in 2006, last year, there were 1,233 affordable housing product loans that came through the Pennsylvania Housing Finance Agency that resulted in 1,233 people in Philadelphia receiving that product. Wachovia only processed 21 of the 1,233. That is, one 143 3/19/07 - FINANCE - BILL 060052, ETC. percent of those affordable housing loans were processed by Wachovia, which is another indicator. So when you look at various indicators, you see some serious problems with how this bank is doing business in the City.

I understand your criticism, but I guess I was just trying to limit the question of the actual written agreement. So you're saying that it was their predecessor you did have a written agreement with?

Yes, we did.

And you never really attempted to get some with others?

No. We haven't represented any other groups against another bank regarding a CRA.

Are you aware -- I don't want to beat this thing to death. Are you aware of any groups that have tried to deal with other banks 144 3/19/07 - FINANCE - BILL 060052, ETC. like this either way?

Not currently. It's a rather -- it's not an easy task of groups particularly to -- but I would say that other banks are being held -- will be held to similar obligations.

At the OCC hearing back in February, we had learned from the OCC that banks did enter into written CRA agreements with community groups.

Okay. That's where I was going. Thank you. Thank you, Madam Chair.

Thank you very much. Are there further questions? (No response.)

Thank you very much. Ronald Johnson, National Coalition of Blacks for Reparations in America. There was someone else here from the same organization. Is it Harry Ricketts or Minister Ari Sesu Merretazon? 145 3/19/07 - FINANCE - BILL 060052, ETC.

Yes, ma'am.

Thank you. Welcome. Please identify yourself for the record, begin your testimony, and thank you for your patience.

Good afternoon. My name is Ronald Johnson. I'm here to represent the National Coalition of Blacks for Reparations in America. To Finance Committee Chairwoman Jannie Blackwell, good afternoon to you and your distinguished colleagues of the Finance Committee, as well as everyone who is present in the City Council Chamber. My name is Ronald Johnson. I'm here today representing the National Coalition of Blacks for Reparations in America, also known as N'COBRA. More importantly, I am a voice for my African ancestors who are enslaved in this land we know today as the United States of 146 3/19/07 - FINANCE - BILL 060052, ETC. America and never received justice for the suffering they had to endure. I am also here today to petition the Finance Committee to divest all City of Philadelphia monies from Wachovia Bank. Before I put forth my reasons why Wachovia Bank should be dropped as a depository of the City of Philadelphia monies, I want to share with everyone in this room a legal principle called unjust enrichment. Unjust enrichment is when a man or entity enriches itself unjustly at the expense of another man or entity. Wachovia Bank has been enriched unjustly by its acquisition of banks that profited from the enslavement of African people. One may argue that slavery was legal. That is a fact, but because slavery was legal, it did not make it morally or ethically right. Human lives were destroyed and forever altered by the institution of slavery. Although Wachovia Bank apologized for its role its predecessor 147 3/19/07 - FINANCE - BILL 060052, ETC. banks played in the slave trade, I do not believe it was sincere. In my opinion, Wachovia Bank was doing what they thought was politically correct. Wachovia Bank took a hard stance by saying they were not in the reparations business. N'COBRA found Wachovia's position on reparations to be unacceptable and called for a national Divestment of Wachovia Bank Campaign at its national conference in June 2006. For a point of reference, Swiss Banks were forced to pay victims of the Jewish holocaust one and a quarter billion dollars as a settlement that they profited from Nazi war crimes, according to a report released by the Reuters news agency in New York. The Washington, DC-based law firm of Cohen Milstein Hausfeld and Toll represented Jewish holocaust victims in this settlement. I cited the Swiss Bank settlement to the victims of the Jewish holocaust to say to Wachovia Bank and 148 3/19/07 - FINANCE - BILL 060052, ETC. everyone who can hear my voice and/or read this testimony that a precedent has been set for a bank who has been unjustly enriched to make financial compensation to those individuals or groups who have suffered financial losses at that bank's expense. By refusing to dialogue around this issue of reparations for African-Americans, I feel Wachovia Bank has disrespected all African-American people in this city, who happen to make up roughly 50 percent of the population. If the Jewish or Asian community were making a similar claim for reparations, Wachovia Bank would roll out the welcome mat. Wachovia Bank should not profit another penny from African-American people. Divest now, City of Philadelphia, from Wachovia Bank. It is the right thing to do. Thank you.

Thank you very much. 149 3/19/07 - FINANCE - BILL 060052, ETC. Are there any questions for Mr. Johnson? (No response.)

Thank you. Please identify yourself for the record. Whoever would like to go next is fine.

My name is Mr. Harry C. Ricketts, Jr., a/k/a Brother Okanga Thosto (ph). Greetings. Madam Chairwoman, Councilwoman Jannie Blackwell, all Councilwomen present, Councilmen present, ladies and gentlemen and to our security element, greetings. In the name of our Lord and savior Jesus Christ, I say heaven oh. Good afternoon. I am a member of the Philadelphia chapter of the National Coalition of Blacks for Reparations in America, a/k/a N'COBRA. Our chapter's main question we bring to the table is not only about divestment of funds. We're trying to get what Councilman Goode 150 3/19/07 - FINANCE - BILL 060052, ETC. is bringing to the table about divestment of the funds of Wachovia Bank. The other main question that our chapter brings to the table is, Wachovia Bank, what is your reparations plan? Now, Wachovia is also involved in a few restaurants, fast food restaurants. One to be specific is Wendy's restaurant. Now, I bring that to the table or bring that to your attention to the Councilwomen and Councilperson now, I bring that to the table because there are advertisements of Wachovia Bank in Wendy's restaurants, and these Wendy's fast food restaurants are of a high population in low-income areas. Also, I will bring -- I'll be brief. I will bring more information at the next meeting. So I gather there will be another meeting, or I hope and pray that there will be another meeting. And we thank the Council for inviting our chapter to bring this attention of the 151 3/19/07 - FINANCE - BILL 060052, ETC. situation about Wachovia Bank, the concerns that not only we at N'COBRA have, but there are other people, the population of this city, have concern about how Wachovia Bank as really not being so welcome or red carpet to our sisters, our queens and the low-income population of this city, be it Africans or being Spanish or, say, other -- what I want to say is other populations or other like, say, what is it -- well, I'll just say other groups or other populations. I'll say that. Now, like I said before, I really hope and pray that there's another meeting with this situation. We can get more people out to a meeting like this. This means a lot to the low-income personnel of this city. Thank you so much for listening. Have a nice day. May the Lord bless you and yours.

Thank you, Mr. Ricketts. 152 3/19/07 - FINANCE - BILL 060052, ETC. Minister.

Yes, ma'am. Thank you. I do realize the hour is getting a little late, and I would like to revise and extend my remarks I made in testimony on February the 20th, but I'd also like to just --

Excuse me. Identify yourself first.

Yes. My name is Ari Sesu Merretazon. I am the Northeast regional representation for the National Coalition of Blacks for Reparations in America and I am a Board member. And I just want to connect my testimony to Wachovia's representatives back in January 21st and just set this thing in a real sense. They failed to recognize the authority of the City Council. It's about recognition. On January 21st they sent a band of lawyers to do nothing but filibuster. Today they sent some Vice-Presidents that had no relevant 153 3/19/07 - FINANCE - BILL 060052, ETC. information based on the requests made by this Council. So it's about smoke and mirrors for them. And they failed to recognize the position of their relationship to citizens of this city and the municipality Council of this city. So they first think that we must meet their needs as opposed to them meeting our needs as a municipality. Now, on February 20th of this year I submitted testimony regarding Wachovia Bank's non-compliance with the requirements of Section 17-104 of The Philadelphia Code, Prerequisites to the Executions and Validity of City Contracts. This section requires any City depository authorized to accept City deposits under Section 19-201 of The Philadelphia Code to annually certify compliance with Section 17-104. And I quote, "If such depository has disclosed slavery policies sold by it or its profits from slavery, to provide the City with a statement of financial 154 3/19/07 - FINANCE - BILL 060052, ETC. reparations, all under certain terms and conditions," end of quote. I submit that the failure to comply with Section 17-104 alone is sufficient and substantial enough for this Council to revoke the depository status of Wachovia Bank, notwithstanding that Wachovia has arrogantly stated for the record that it has no intentions of paying reparations and thus refuses to submit a financial reparations plan as required by the Code. Additionally, however, my testimony this afternoon is a moral appeal to your hearts and minds that Wachovia, despite its superficial efforts of corporate responsibility, under certain terms and conditions, is still today at this very moment undergirding and advancing a de facto public policy which is a vestige of the legacy of its enslaving predecessors starting from the beginning with the Bank of North America. During the sanctioned of 155 3/19/07 - FINANCE - BILL 060052, ETC. enslavement of blacks, Wachovia's enabling predecessors were unjustly enriched by the totality of black people's existence and condition in America based on a public policy defining blacks as human commodities and their labor as cheap tools to produce great wealth. Wachovia has inherited a large portion of that wealth and refuses to repair the wrongs of its predecessors, the sins of its fathers. Wachovia's predecessors' absolute power over blacks allowed them to operate an efficient and effective enslavement system. Make no mistake about it, many of Wachovia's predecessors were slave holders and slave merchants, starting with its original founders, Robert Morris and Thomas Willing, and the government provided the environment and the legal context and framework that allowed oppressive public policy to exist and operate and profit corporations for over 300 years. 156 3/19/07 - FINANCE - BILL 060052, ETC. " This is the context which Wachovia is operating in today without recognizing it. They refuse to recognize their historical relationship to enslavement. They refuse to recognize this Council based on the information that the Council had requested from it. Fundamentally now, the rationale behind the introduction of Philadelphia's slavery disclosure law is to no longer allow corporations with predecessor institutions which profited from enslavement of blacks to use a legal framework to do business with the City of Philadelphia without submitting, 157 3/19/07 - FINANCE - BILL 060052, ETC.

quote/unquote, "a financial reparations plan" to remedy the effects of enslavement on black citizens of Philadelphia today. Therefore, we are asking your offices, the City Council of Philadelphia, to uphold and revoke Wachovia's depository status, unless and until Wachovia provides the City with, one, a full impartial study on the impact of its participation in the holocaust of enslavement on African-Americans and, two, a financial reparations plan, with input from N'COBRA, based on its full disclosure of its predecessor institutions profiting from enslavement and the contemporary vestiges of enslavement. Now, I thank you for the time to present this. I know the hour is late, but it's key for us to engage in some discussion with this, because Wachovia's policy is not to even discuss the matter. So as long as we have public 158 3/19/07 - FINANCE - BILL 060052, ETC. discussion on the issue and raise questions, pro and con, we need to begin to germinate the symmetry to lay out the full issues and show the relationship of Wachovia, not only to date but also in the past, that affects today directly. I thank you for the time.

Thank you very much. Are there any questions? (No response.)

The last and final person, Margaret Williams. Are you here? And then is there anybody else here on this bill? Stan Shapiro. All right. Is there anyone else? All right. And Jim Royal. Is that it? They will be the final three to testify on this. And then for members of the Committee, we have one last bill. Thank you for your patience. Thank you. Please identify yourself for the record. 159 3/19/07 - FINANCE - BILL 060052, ETC.

Yes. My name is Margaret Williams. I'd like to say good afternoon to City Council and I thank you so much for giving me the opportunity to speak. I would just like to let you know that Wachovia Bank not only is involved in other issues as far as slavery or whatever, they also stole my house. Wachovia Mortgage Company -- I have all the proof to prove it. They stole my house in sheriff's sale in 1998. When I did my investigation and proved to them that they stole my house, they came to City Hall and vacated the judgment. They never notified me that they vacated the judgment. They vacated a judgment three years later because I was fighting for my rights. Now, after they vacated the judgment, they concealed the sheriff's sale off of public records. I have my documents here to prove there is no 25 sheriff's sale on my records. It only 160 3/19/07 - FINANCE - BILL 060052, ETC. states "vacated." Now, it goes deeper. I contacted the President of Wachovia Bank. He sent me to a lawyer in Reading, PA. His name was Steven Adams. Mr. Adams sent me a letter stating Wachovia had no 8 missed mortgage payments of my account. Now, I have a letter from the attorney. So I said, Well, why did you take my house? So he said to me, Oh, I thought you told me if I give you the letter, that you would go away and leave me alone. I said, Do you think I'm that stupid? Guess what he did? I have a recent letter from him as of three months ago. He threatened me with a certified letter. He said, If you come into this office or even call Wachovia office again, I will have you arrested for harassment. And plus he had the Police Department to call my house and threaten 161 3/19/07 - FINANCE - BILL 060052, ETC. me. He said, I dare you to come into this bank. And I think that was one of the most crucial things of my life. They never even apologized to me. He just took advantage of me because I'm poor. And he told me, You go find yourself a lawyer to fight against us and I guarantee you they won't do it, because they have that much connection into Philadelphia and they know like a lawyer on my stand of my income would not fight against them. They too powerful to fight. But, you know, I'm not giving up. I have my receipts to prove that my house is paid for, and I'm going to continue to fight. Even if I have to go to Reading and get arrested, I'm going. They giving back my house. And I thank y'all. (Applause.)

Thank you very much, Ms. Williams. We've known her for many years 162 3/19/07 - FINANCE - BILL 060052, ETC. and she's been fighting this issue. Stan Shapiro. Thank you for your patience, all who are left to testify. Thank you. Please identify yourself for the record.

Hello everybody. I'm Stan Shapiro and I am here in my capacity as Second Vice-Chair of Neighborhood Networks. I'm not going to add anything to the record with respect to Wachovia Bank. Enough has been said, and all of it is pretty awful. Neighborhood Networks does support this legislation and does believe Wachovia is eminently qualified and deserving of being discharged as a depository for City funds. I just want to point out the only thing that I'd like to add really to the record is something that's in the law and it's really incredibly unfair aside from what's been on the record, and, that 163 3/19/07 - FINANCE - BILL 060052, ETC. is, that the banks in the City get special treatment under the business privilege tax. They pay a small fraction of what other businesses pay as an industry, and they should be held as an industry to a particularly high standard of performance and of performing as good corporate citizens in the City of Philadelphia, and it's clear from the disparity records that Councilman Goode pointed out and it's on the record now that as an industry, they're underperforming. Wachovia is the biggest member of that industry, and it is clearly high time that they are held to the performance that should be expected of them. They get these preferential rates and they provide nothing in return. They also earn profits from their status as a depository, and it's very outrageous that they've been able to get away with what is on the record today.

Thank 164 3/19/07 - FINANCE - BILL 060052, ETC. you very much. Are there any questions for Mr. Shapiro? (No response.)

Thank you. Always a pleasure to see you. Mr. James Royal. Thank you. Welcome. Thank you for your patience.

Thank you. Good afternoon. My name is Reverend James Royal. To the Chairman, to the Committee, I'm going to be short. I just want to echo everything that has already been said about Wachovia Bank, and I do believe that the work that the Councilman has done -- I think someone said it right before me, especially being spearheaded by Councilman Goode -- we appreciate all the work that he's done. But we need to straighten these matters out and I think starting here, taking that bank off the list, even though they might be the big dog in the house, we got a lot of big dogs in the house, but we also have a lot 165 3/19/07 - FINANCE - BILL 060052, ETC. of little ones, and if they had loaned money to small businesses and helped people finance their businesses, people would have a place to work and they could pay their bills. But when they go about not to -- to divest the neighborhood and the -- I guess you could call it testimony they gave this afternoon, I was really surprised at the Vice-Presidents and those folks that's supposed to be up the ladder. I guess they're supposed to do some foot work and everybody is supposed to go away. But I just want to commend the Council, and we support the efforts of the movement by Councilman Goode and we hope that this will hopefully turn the tide, because things are not going to get any better, and Wachovia is not the only one in the house that's doing those type of actions. Thank you.

Thank you very much. 166 3/19/07 - FINANCE - BILL 060052, ETC. Any questions for Reverend Royal? (No response.)

Thank you very much. The last bill to be considered today is Bill No. 070072, commonly known as the "green roofs" legislation. The Clerk will read the title of the bill. While he is reading that title, we ask Charlie Miller, Mr. Tim McDonald, Thurman Brendlinger and Jill Kowalski, as well as Alisha Deen-Steindler and Christine Knapp to come forward. After that, we will hear the Administration and then we will enter our stated meeting for our hearing today. Thank you very much.

Bill 070072, an ordinance amending Chapter 19-2604 of The Philadelphia Code, entitled "Business Privilege Taxes," by providing a "Green Roofs Tax Credit" for costs incurred to erect a "green roof" that supports living vegetation, under certain terms and 167 3/19/07 - FINANCE - BILL 060052, ETC. conditions.

Thank you very much. Charlie Miller, we assume that you will be first, and you may speak in any order you choose. Thank you very much. Please identify yourself for the record and begin your testimony. Thank you. Thank you for your patience.

My name is Charles Miller. I am the owner and President of Roofscapes, which is a company in Philadelphia dedicated to the design and installation of green roof systems, and I'm here because we have been involved in building green roof projects across the country for the last ten years and it's only been recently that I've had business in my own home town, which is very exciting to me. And in particular, the new Philadelphia stormwater management regulations recognize green roofs as a mechanism for addressing or complying with those portions of those regulations. 168 3/19/07 - FINANCE - BILL 060052, ETC. I'd like to just define briefly how I look at green roofs and their use as a valuable way of improving the environment in the City. First of all, green roofs are related to landscape systems, which have actually been around for quite a long time, and we recognize these around Philadelphia as plazas on the streets, which are actually over top of buried structures. They're shallow soil systems. They require waterproofing. All the technical challenges associated with installing a green roof are familiar to engineers, and nothing novel about them. What is novel is that green roofs are designed to be much thinner and lighter and less expensive and easier to install, and they're intended to provide specific benefits in terms of energy and in terms of stormwater runoff mitigation. The principal benefits associated with green roofs are that they 169 3/19/07 - FINANCE - BILL 060052, ETC. extend the life expectancy of the roofing systems that they overlie and, therefore, add value in that way. As I said, they can be very effective in complying with stormwater regulations regarding rate, quantity, water quality. They have been used effectively in Europe for the last years to address combined sewer 10 overflow issues, which is a major problem 11 in Philadelphia. They can be used 12 effectively to address small storm 13 flooding events, which are all too 14 typical in Philadelphia. And they are a 15 way of replacing open space or pervious 16 area quality to the surfaces that they're 17 applied to. 18 They also have energy benefits 19 inasmuch as green roofs have performed 20 effectively as reflective roof surfaces do, so-called Energy Star roofs, which are white and designed to be cooler. Green roofs will actually maintain the roof in a more cool condition and will be more durable in their performance than a 170 3/19/07 - FINANCE - BILL 060052, ETC. white roof would be. And in certain circumstances, depending upon the building, they can confer benefits to the owners of the buildings in terms of energy savings. " This is based upon research done by Columbia University using data collected at Penn State University, and shows very convincingly that green roofs outperform white roofs in terms of being cool roof systems. The temperature diagrams also shown were collected from a prototype project here in Philadelphia, and the red lines show the temperature measured underneath the green roof, the blue lines are the temperatures measured on an identical and adjacent gray roof, classic Philadelphia rubber roof, and this roof was only -- is only two and a half inches 171 3/19/07 - FINANCE - BILL 060052, ETC. thick, and you can see the tremendous benefit in reducing the temperature variation and -- well, essentially the temperature variations and reductions in summer temperatures in particular during the mid-day times. And in the winter, it even confers benefits inasmuch as long as there's some water in the roof to still freeze, the roof temperature never drops below 32 degrees. From a stormwater standpoint, green roofs, from sort of an engineering mathematical point of view, look just like tension basins and, as such, can be designed to provide the same types of benefits as, in this case, small distributed tension basins would provide. These benefits aren't speculative. They can be calculated.

There are models that we use, which can estimate them with precision. Some of the remaining slides sort of point out some of the principles involved, which are that we're trying -- 172 3/19/07 - FINANCE - BILL 060052, ETC. we're not just doing a roof here. We're creating a landscape and everything that that entails in terms of quality of life, aesthetics for the City, enriching the life being in the City. There are many, many different ways to build these systems. The goal always is to keep them as light and as thin as possible and as low cost as possible for the benefits that they provide. So there are -- I have shown in a couple of these slides some of the many materials which are being used, to stress the point that this is a technology which has been around for a while. Its elements are well known. Some of the remaining pictures show just examples of green roofs of different depths and types, some irrigated, some not irrigated. And the point being that especially in a city, all sorts of green attractive environments can be created while in the 173 3/19/07 - FINANCE - BILL 060052, ETC. course of adding to the city basically from an engineering point of view a device or a system or a -- well, that is providing a specific engineering benefit. I've been talking about mostly the green part of the green roof. Everyone tends to be more concerned about the waterproofing part of the green roof and I don't want to neglect that. I would say that there are many excellent waterproofing systems available that are well tested, and many of these have been proven over time to be very durable and, in particular, some of these have a long record of use in Europe where green roofs have been continuously in service for over 40 years at this point. Some waterproofing systems will require an additional layer to protect the waterproofing from roofs, and that is a commonplace or an add-on. I wanted to stress that especially when you're trying to use green roofs to achieve an objective, 174 3/19/07 - FINANCE - BILL 060052, ETC. policy objective, which I think this bill 3 is aimed at, to encourage use of green roofs to obtain a benefit for the City as a whole, the idea is to keep things as inexpensive as possible and so the easiest way to do that is keep it simple, use materials which are simple, use as few components as possible, use techniques which allow rapid installation, cover large roofs when possible to get the most benefit and the best value, unit cost value. And these are all things which will tend to come to pass when there's an incentive for people to utilize these techniques. The last several slides show an example of one of these simple systems, which was installed recently at Wal-Mart, a Wal-Mart project in Chicago, as part of their citywide green roof program. And as you can see, the whole emphasis here is on using material which is blown into place, seeding a roof instead of planting it out, protecting it from wind with 175 3/19/07 - FINANCE - BILL 060052, ETC. hydro mulch. And this sort of technique and approach can make green roofs an accessible and valuable addition to other techniques being used in the City. That's all I have to say.

Thank you very much. So what do you do if a building is as high as my Cira Center, or does it matter?

The bigger, the better. The bigger they are, the easier they are to do.

Really? And what if your roof is -- is it for new construction or for somebody who might have a leak?

I'm sorry?

Somebody who might have a roof leak. I mean, is it for new construction?

Oh, no. I think that an ideal time to think about a green roof is -- one thing I should have said is, there is not a city, except maybe 176 3/19/07 - FINANCE - BILL 060052, ETC. Baltimore, in the country that I've seen that's better suited for retrofitting with green roofs, meaning the types of buildings which exist in the City, lots of flat roofs, a lot of heavily built buildings with heavily built roofs. When those roofs start to leak and people are thinking about replacing or waterproofing, that is the logical time to re-roof and, in doing so, to add a green roof. And if it's done on a large enough scale, the cost can be reasonable. If it's done in a more piecemeal fashion -- one roof here, one roof there, three this year, eight next year -- it will always be a boutique sort of thing. But when a city gets behind a program, like Chicago has and like Philadelphia now is, that can transform the marketplace and it becomes a feedback cycle where more work produces lower cost produces more efficient work and more projects.

Thank 177 3/19/07 - FINANCE - BILL 060052, ETC. you. Explain again how this is financed, paid for, this whole initiative.

Well, right now it's paid for by building owners which are either doing it because they -- right now it's a completely voluntary thing. It's being done by people who see the benefit to the City and to the environment of installing a green roof. That's changed now with the new stormwater regulations inasmuch as green roofs will now be counted as open space. So in constrained sites where land surface, the ground, is very limited and you have an objective or -- really not objective, a mandatory reduction of 18 percent in impervious area, the roof 19 becomes an obvious place to go. 20 So I think this already, in terms of clients that are approaching us, indicates that people are taking a serious look at this. But it's still a costly venture, so some sort of incentive to sort of bridge the gap to make this 178 3/19/07 - FINANCE - BILL 060052, ETC. affordable I think could have a transformative effect on the use of this and similar techniques.

Madam Chair.

Councilman Kenney.

Thank you very much. I just want to give you a practical example of what could have happened differently had we been involved in this technology earlier on in our history. In Councilman DiCicco's district, from Washington Avenue to Oregon Avenue on Columbus Boulevard, ten years ago, 15 years ago, there was virtually no development that happened down there. Within a decade or a little more than a decade, there are literally hundreds of thousands of square feet of flat roof that have come about as a result of Home Depot, Wal-Mart, Lowe's, 179 3/19/07 - FINANCE - BILL 060052, ETC. Ikea. I mean, you can go down the list of the literally hundreds of thousands of square feet. None of them have green roofs, but all of them are connected directly into the stormwater system. And our stormwater system is not a separate system. It's both sewer and stormwater. Over the past six, seven, eight years, especially the residents west of those facilities, of those stores, have experienced a tremendous amount of terrible flooding, basically coming about as a result of quick downpours that happen over in the summertime and the spring where you have a lightning storm, a thunder storm that drops three inches of water in a period of a couple of hours. All of those downspouts from all of those large roofs are going directly into the stormwater drains, filling up the sewers. And as the sewers fill up, the water has nowhere to go but to back up into the houses. And because so many people in South Philadelphia and other 180 3/19/07 - FINANCE - BILL 060052, ETC. places have dug out their basements and remodeled their basements and use it as rec rooms and bedrooms or whatever, that rainwater, along with the sewage water, comes right back into the house. Theoretically, we could probably, if we had a green roof on every one of those large retail boxes, we could probably go a long way in eliminating that problem. So in the long run, the cost that we're suggesting the City bear, which is a one-time forbearance of up to a hundred thousand dollars in the BPT, I think in the long run saves us money, because I'm sure we're getting sued by every homeowner that gets their basement flooded. I've been with Councilman DiCicco to Water Department presentations that are talking about mitigation issues for the stormwater that costs literally hundreds of millions of dollars, big basins, and one of the suggestions was digging up Marconi Plaza and putting big 181 3/19/07 - FINANCE - BILL 060052, ETC. catch basins in. I mean, all kinds of really interesting ways of solving the problem, when this is a relatively inexpensive, very environmentally friendly and easy thing to do to reduce the pressure immediately on those neighborhoods and also to try to do this in a citywide basis. Because not only can you do it in a commercial property like a big box store or an office building, but you could do it in residences. As a matter of fact, one of our guests today will testify as to a residential housing development in Councilman DiCicco's district that is totally green-roofed. So I recognize the financial cost that the Administration will probably say they can't afford, but I think for the hundred thousand dollars max and the number of people that will initially take advantage of it, I think it really is very cost effective. I wanted to put some context 182 3/19/07 - FINANCE - BILL 060052, ETC. into our discussion.

Does the Water Department basically support the concept, since we're dealing with stormwater as an issue?

The Water Department recognizes that the new stormwater management regulations need to be addressed, and they can be addressed in part, not just solely but in part, by this type of technology that's been used in Europe and in Germany and other countries for 20, years. I'm sorry. 15

Thank 16 you. Thank you. 17 Who is next? Please identify 18 yourself for the record and begin your 19 testimony. 20 MR. TIM McDONALD: My name is 21 Tim McDonald. Thank you, Committee and 22 Chairperson, for allowing us to speak 23 here today. 24 I just wanted to say something 25 about the Water Department, because we're 183 3/19/07 - FINANCE - BILL 060052, ETC. very much in the process of dealing with this right now with two projects that we're working on. I should first say that this is Howard Steinberg, a partner of mine in an architecture firm and a construction company and a development company, and my brother, Patrick McDonald, who is -- we're all partners in a development/design/build company. So what we do is, we find a piece of land and we come up with an idea for a project. We design it ourselves and we build it ourselves. We're architects, we're builders and developers. And every project that we have on the boards right now is completely green-roofed and will continue to be. Two in particular in Northern Liberties, one for a 70-unit residential project at the site of the old stables, which will be the first LEED gold certified multi-family dwelling project in the country, and the green roofs are just one part of that. Another just up the street is a 42-unit 184 3/19/07 - FINANCE - BILL 060052, ETC. residential completely green-roof-covered project with a daycare center. The Water Department has just, as of last week, said that the green roof itself alone is the stormwater management system for these projects. So it doesn't just help to mitigate stormwater management, it is the system itself. They have identified green roofs as a definitive stormwater management system, which we've known all along, but that's a really terrific acknowledgment for the possibility of green roofs taking on that role, stormwater management, in the City, along with many other, which we can talk about. So I just wanted to first say that. The other thing that I wanted to say was that what we're interested in -- Charlie talked about the technical dimensions and benefits of green roofs. We pull back from it and treat that as one of many issues for us when it comes to development in the City. What we're 185 3/19/07 - FINANCE - BILL 060052, ETC. trying to do as developers and architects and builders is actually create sustainable communities, period, sustainable when it comes to managing your own water on site, when it comes to generating your own electricity, when it comes to cutting your energy costs by 50 percent, when it comes to reducing carbon emissions into the environment, reducing the greenhouse effect. So I think that green roofs are a significant step in that direction for this city to become a sustainably oriented development city.

I know I should wait until you're finished, others may have questions, but my colleague, Councilman Kenney, said it's a one-time investment. Well, who maintains these and who pays for maintenance of these?

I depends on the project, but -- maybe you should talk about that.

Well, I think we 186 3/19/07 - FINANCE - BILL 060052, ETC. both have something to say about this. The sorts of projects which the McDonalds are involved in building, these are going to be important recreational and garden spaces for these folks. So maintaining the garden will be a pleasure, not a duty, and an enhancement in their lives, and it improves the value of their buildings because people know that. But for large projects that might cover a library or might cover Ikea or something like that, they have to look at it from a management point of view. And it's been our experience that the most effort that's required to maintain a roof, if it's done by skilled or trained people, is three man hours per 1,000 square feet per year. It's not a lot of time. It's the amount of time that could easily be pulled if you've got crews which are doing other -- are being hired to do other landscape maintenance. This is a tiny fraction of that. And the sorts of plants that are installed in these thin 187 3/19/07 - FINANCE - BILL 060052, ETC. systems are drought-tolerant species that are designed to survive when the weeds can't. They're kind of -- they're designed to be extreme, unpleasant environments for most plants to live in except the ones we choose to be there, and for that reason, it makes their maintenance much less than, say, a garden would be or your background. MR. TIM McDONALD: I want to say something about maintenance, too. The other thing that hasn't been directly stated is that a green roof extends the life of your roof by two times minimum, if not three. So it doubles or triples the life of your roof for one simple reason, because you're blocking UV rays from deteriorating your roof. So it works in all senses.

Can I just add one environmental --

Yes, Councilman. How long is 1,000 square feet? 188 3/19/07 - FINANCE - BILL 060052, ETC. Double this room?

Ten by 100. So this is, what, 75 feet across?

I still don't know what that means. COUNCILMAN DiCICCO: Ten feet wide.

A little more than a rowhouse.

One of the other important environmental issues -- and this is as the roofs exist today in Philadelphia -- if you fly over or see aerial photographs of Philadelphia, every roof just about is a black-topped roof. As the UV rays and the other elements break that roof down, whenever water comes onto it in the form of rain, either whether it's a light rain or a heavy rain, it picks up the petroleum products of that material and takes with it those petroleum products within the water into the storm drain system. When you have a green roof, the vegetation or the turf 189 3/19/07 - FINANCE - BILL 060052, ETC. and the dirt that's on there filters naturally the rainwater. It's actually dirty from the elements in the sky. It never hits the -- what's the material? The tar roof. Never hits the tar roof, goes cleaner than it would be normally back into the storm system. When all that tarred roof gets the rain on it, it takes those materials with it and puts it right back into the water system again. So, I mean, from long-term environmental benefits, it's a tremendous asset, but I think importantly from a subjective side, we're like the last city that's done anything like this. I mean, Chicago is way ahead. New York has done stuff, Austin, Texas. This creates another cachet for the City with younger people and people who are environmentally conscious who may want to move here and live here and get either a grant, which we're working on next, or a tax credit for establishing a business, a building that they can make environmentally 190 3/19/07 - FINANCE - BILL 060052, ETC. friendly. I think like the Mayor's wireless program that's brought that kind of attention to our city as a high-tech city, being environmentally friendly city, I think, also brings a cachet that brings a certain element of excitement to people wanting to live here.

Thank you. Who is next?

My name is Howard Steinberg. I'm an architect in Philadelphia and part of this group. Our experience has been in just this short time that we've been working with green roofs in our projects, we're getting increased inquiries about how these could be implemented even at the small-scale residential project, calls from people in the City. But at this large scale, just to put it in perspective, Councilman Kenney is speaking about these large box retail centers. These are upwards of 191 3/19/07 - FINANCE - BILL 060052, ETC. 200,000-square-foot rooftops all within one store. A typical rainfall, couple inches of rain, that equates to, rough calculation, about 137,000 gallons of water just in that one rain that hits the system, hits the stormwater system that has to be processed. So I think there's also another consideration for City government and the utility companies to recognize the savings in not having to treat that water. So there's a savings on this end that helps offset the credits, tax credits, that are being offered or proposed to be offered. So I just commend Councilman Kenney on this initiative and hope that the City government follows. Thank you.

Thank you. Anyone else who would like to testify? MR. PATRICK McDONALD: Yes, Madam Chairman. Thank you, and Council. 192 3/19/07 - FINANCE - BILL 060052, ETC. My name is Patrick McDonald from Onion Flats and I am a registered master plumber here in the City. When we started our last project, which is in Fishtown my brother had referenced, it was very important to me and has been for years knowing that the level of the system that we have here. Howard just touched on it. It's not literally a storm system that we have here. Our infrastructure is so old on the eastern seaboard that it combines, as I'm sure that most of you know, it combines both sanitary waste and storm waste. So every single ounce of water that goes in from a rainstorm across these roofs and picks up the particulates that Councilman Kenney spoke of goes right into, whether it's clean or not, the sanitary system and goes directly to the treatment plant. Energy is being used to do it and also tax dollars. But, most importantly, in my opinion, for these rains that are in excess of a 193 3/19/07 - FINANCE - BILL 060052, ETC. certain amount of inches, over two inches, there's a good portion of that water that is bypassing the system, some of it ending up in some of the homes that Councilman Kenney spoke of and elsewhere in the City, but going directly into, with waste, with industrial waste and home waste, directly into our rivers. It's been a very important situation for me to address over the years, being a plumber, and also in the past decade, a developer. And with the introduction of our project, I went to the Water Department to discuss this situation that I felt I was coming up with that actually cavemen came up with, and that was to reclaim rainwater and actually use it on site to water your shrubberies and whatnot and not put it into the system and overflow the system. The Water Department at that point didn't have many restrictions on that, and being a part of L&I with my license, L&I really didn't have many 194 3/19/07 - FINANCE - BILL 060052, ETC. ideas on it either, and I was basically told by an engineer in the Water Department to just do it. We did it. It was a huge success. We're keeping 6,000 gallons of water every storm out of the sewer system and out of the rivers. And I just think that it's very important for all of us as human beings, let alone Philadelphians, to look at what we're doing as far as people of this planet to enhance the planet instead of just continually taking it away. The other thing that I would like to address is -- and I don't think anybody has mentioned it -- is the heat island effect that the roofs that we have currently in most urban communities has on the environment. The heat island effect addresses the amount of temperature differences that a hot black tar roof has on the environment, on our neighborhoods. There have been studies that 195 3/19/07 - FINANCE - BILL 060052, ETC. have shown right here in University City off of Osage Avenue that one side of a City block was painted -- the roofs were painted white and the other side was left to be the tar black roofs, and the temperature rating was somewhere around two degrees cooler on the left-hand side of the block as it was on the right-hand side of the block. Now, that may not seem like a big difference or like it's a big problem, but with the deaths that we're experiencing every year in Philadelphia and lots of the urban communities with the older people and the poorer people that actually can't get out of their house, the handicapped people that can't leave and can't afford the air conditioning bills, it's very important, in my opinion, to take on ways of lowering that heat island effect. A green roof will -- I'm not sure of the percentage, but it will lower the effect even more than painting the silver roof or the white roof on top in a 196 3/19/07 - FINANCE - BILL 060052, ETC. huge increment. So that's really all I wanted to say.

I just ask for your support in helping make Philadelphia one of the models of green building, and thank you for your time.

Thank you. Would anyone else like to testify? Please identify yourself for the record, begin your testimony. Thank you for your patience.

My name is Thurman Brendlinger, Program Director for Clean Air Council, and I appreciate, Councilwoman Blackwell, for hearing us here today. I'll talk about some of the air pollution effects and positive effects of the green roofs. We're definitely in support of the green roofs tax credit. Clean Air Council is a non-profit environmental organization 197 3/19/07 - FINANCE - BILL 060052, ETC. celebrating its 40th anniversary of its mission to protect everyone's right to breathe clean air. Council has long worked on air quality issues here in the City, and the City itself has a long history for green initiatives. Fairmount Park is one of the oldest and largest City parks in the nation. Its 9,200 acres of green area not only provide recreation space for residents and visitors to the City, but it provides trees and foliage to filter the air and water. Groups like the Pennsylvania Horticultural Society with its Philadelphia Green program have transformed vacant lots into beneficial green spaces, which help reduce the dust particles in the air. Philadelphia reduced the total number of vehicles in the City's fleet and purchased 22 hybrid vehicles to replace older polluting models. And recently, the Philadelphia International 198 3/19/07 - FINANCE - BILL 060052, ETC. Airport purchased 13,000 megawatt hours per year of wind energy, enough to offset million pounds of carbon dioxide, 5 which is one of the substances affecting 6 global warming, from fossil fuel electric 7 generation. 8 In 2005, the Mayor signed the 9 U.S. Mayor's Climate Protection Agreement 10 to take action to mitigate global 11 warming. The agreement calls on cities 12 to at least meet a seven percent 13 greenhouse gas reduction from 1990 levels 14 by the year 2012. The green roof tax credit ordinance assists the City in meeting these climate protection goals. Promoting green roofs is one of many programs that the City needs to implement for it to reach the necessary targets to stem global warming. Green roofs cool buildings in summer, providing for a reduction in the use of air conditioning and a resultant decline in the use of polluting fossil 199 3/19/07 - FINANCE - BILL 060052, ETC. fuel-generated electricity. In the winter, green roofs can insulate a building from heat loss by as much as 5 percent, again saving energy and 6 preventing pollution. 7 Green roofs provide air 8 pollution reduction. The additional 9 vegetation provided by green roof tops 10 would provide more air pollution 11 filtering for the region. Green roof 12 tops last longer, as mentioned earlier, 13 thereby requiring less resources and 14 energy to generate the roofing materials 15 for more frequent replacement. Again, 16 less fossil fuel burning to generate that 17 energy. 18 Furthermore, many materials 19 from recycled products are being 20 developed for use in green roof 21 technology. This new use for recycled 22 materials creates another market for 23 energy-saving recycled products. 24 Clean Air Council urges City 25 Council to adopt the green roofs tax 200 3/19/07 - FINANCE - BILL 060052, ETC. credit ordinance as the next step toward cleaner air and a better quality of life for the citizens of Philadelphia. Our children will thank you for your forward-thinking leadership. Thank you again.

Thank you very much.

Good afternoon. My name is Alisha Deen-Steindler and I am the Eastern Pennsylvania Director of Clean Water Action. Clean Water Action is a non-profit environmental organization. We advocate for clean, safe and affordable water. We have over 8,000 members in the City of Philadelphia, and we thank you for allowing us to address the Council today on the issue of the green roofs tax credit as put forth by Councilman James Kenney. Stormwater runoff is a huge problem in Southeast Pennsylvania in the suburbs as well as in Philadelphia. We 201 3/19/07 - FINANCE - BILL 060052, ETC. have more stormwater to deal with because of an increase in impervious non-porous surfaces in our region. Our organization works with cities, townships and boroughs throughout the region to adopt more protective water municipal ordinances, including a stormwater ordinance. Why is urban stormwater runoff so bad for the environment? Since the Clean Water Act was passed in 1972, water pollution regulation has focused on water discharges from facilities such as factories and sewage treatment plants, but stormwater is untreated and there isn't just one pollution source to crack down on. It is very difficult for environmental regulators to control pollution when it's coming from everywhere. The reality is, stormwater is a nasty soup composed of a collection of pollution from many, many different sources. Depending on the days, stormwater can have in it sediments, pesticides from lawn care, solvents, 202 3/19/07 - FINANCE - BILL 060052, ETC. metals from brake pads, ethylene glycol and propylene glycol from engine coolant and from de-icing airport runways. In the mix are also car oil and gasoline, sodium chloride, calcium chloride from road salt, pathogens like fecal coliform, and let's not forget chunky bits of trash from the sidewalks. After heavy rainstorms, all of that stuff goes right into the Delaware and the Schuylkill, changing the natural habitat for fish and aquatic plants. Excess nutrients in water can create serious biological problems within water bodies, where algae will take over and stifle natural flora and fauna. Excess sediment can clog fish gills to the point where they cannot survive and species start to disappear from our rivers. In Philadelphia, we have older sewage infrastructure that results in combined sewage overflows during storm events. This means that excess 203 3/19/07 - FINANCE - BILL 060052, ETC. stormwater shares the same pipes as our underground sewer shed. The end result is raw sewage gets flushed into our rivers at 180 outfalls simply because of a lack of capacity. Philadelphia already has a stormwater fee in place, but this fee is not currently based on impervious surface on the property. One of the major economic effects of urban stormwater runoff is flooding and property damage from excess water. In a natural hydrological cycle, when rain falls, 60 percent of that rain goes back into the ground and is retained for groundwater recharge and natural water purification. In an urban setting, only five percent goes back into the ground for infiltration. When we are surrounded by so much impervious surface like parking lots, roads and rooftops, the water has nowhere to go but onto our streets and our basements. Green roofs are part of the solution to urban stormwater runoff. In 204 3/19/07 - FINANCE - BILL 060052, ETC. 2006, the Pennsylvania Department of Environmental Protection released a Stormwater Best Management Practices Manual with statewide guidance on how to deal with the problem. In the manual, vegetated rooftops or green roofs are listed as an effective way to reduce stormwater runoff. S. Green Building Council has a program called LEED, which stands for Leadership in Energy and Environmental Design. Our very own Comcast building will be a LEED-certified building. Green roofs can contribute to between six to points 16 towards LEED certification.

Green roofs offer tremendous water benefits such as reducing stormwater runoff and improving water quality. They provide opportunities for rainwater to return to a more natural hydrologic cycle through groundwater retention, peak runoff reduction and improved water quality. In summer, green roofs can retain 70 to 80 percent of 205 3/19/07 - FINANCE - BILL 060052, ETC. rainfall, and in winter, they can retain between and 40 percent. Additionally, 4 the vegetation on green roofs has the 5 capability to absorb pollutants from 6 rainwater. The same heavy metals and 7 nutrients found in stormwater can bind to 8 the soil instead of being discharged into 9 the groundwater or streams or rivers. 10 Over 95 percent of cadmium, copper and 11 lead can be taken out of rainwater 12 through soil in natural conditions. 13 Green roofs allow a city to restore part 14 of their natural hydrologic cycle by 15 increasing evapotranspiration and, as a 16 whole, reduce the building's ecological 17 footprint. 18 Germany has the highest number 19 of green roofs, covering about 15 percent 20 of all flat roofs in the country. Since 21 1984 when Munich included green roofs in 22 its building ordinance, Germany's cities 23 have developed stormwater taxes and 24 subsidy programs for residents and small 25 businesses. 206 3/19/07 - FINANCE - BILL 060052, ETC. Incentive-based programs work. Chicago is a shining example of how effective incentive programs are for green roofs and green buildings, not only in businesses but residential programs as well. Chicago has green roofs in their city buildings, including their City Hall, and is actively promoting their use. The Bronx Borough has created an Environmental Revolving Loan Fund for zero interest loans to Bronx businesses and building owners that implement energy-efficient measures and new technology that improves the air quality of the borough. The City of Los Angeles, California; Portland, Oregon; and Washington, DC all have programs to encourage green roofs. The time has come for Philadelphia to join that list of leaders in the country. Clean Water Action supports this ordinance on tax incentives for green roofs as a step toward stormwater remediation in Philadelphia and as a way 207 3/19/07 - FINANCE - BILL 060052, ETC. to improve water quality. There are many more actions the City of Philadelphia can take towards reducing urban stormwater runoff and this bill is a big step in the right direction for Philadelphia to become the Next Great City. Thank you again for the opportunity to testify on this ordinance.

Thank you very much. Please identify yourself for the record and begin your testimony.

Good afternoon. My name is Jill Kowalski and I'm the Executive Director of the Delaware Valley Green Building Council. Thank you for the opportunity to testify. S. Green Building Council serving Southeastern Pennsylvania, Southern Jersey and Delaware. Since 2001, we have served as a primary source of educational programs 208 3/19/07 - FINANCE - BILL 060052, ETC. and regional point of contact for users, agencies and companies interested in green building and fostering cooperation and collaboration among organizations dedicated to environmental responsibility and sustainability. Our mission is to advance and support sustainable and environmentally responsible planning, design, construction and operation of the region's buildings, landscapes, cities and communities, mindful of the legacy left behind for future generations. I'd just like to put green roofs in a little bit of a bigger context. The impact of the built environment is often underestimated and misunderstood because it's costs are scattered across different budgets and categories, including construction, material and manufacturing, transportation, commercial, residential, industrial spread all over the place, but it all comes down to built environment. 209 3/19/07 - FINANCE - BILL 060052, ETC. When you take a comprehensive look at the economic impact of buildings, the numbers are staggering. S. S. 2 percent of all potable water, while consuming 40 percent of raw materials globally. S. S. energy consumption and greenhouse emissions annually. This is more than the transportation and industrial sectors. So the decisions you make about buildings have a huge impact on the environment we all live, work and play in. With Philadelphia's overtaxed and aging infrastructure, the City needs 210 3/19/07 - FINANCE - BILL 060052, ETC. to understand, invest and encourage green building practices in both renovations and new construction. Environmentally responsible practices have many benefits, including effectively managing stormwater, increasing energy efficiency up to 60 percent, reducing the urban heat island effect, and improving water and air quality. Today, I am here in support of Councilman Kenney's green roof tax credit. Philadelphia has an underutilized resource in our roofs, one that if properly leveraged could transform the lives of many City residents. There was a lot of expertise telling you about green roofs, so I'm going to skip some of my testimony so I don't repeat a lot of what my peers here have said. Urban environments transform the natural landscape and tend to interrupt biological processes, resulting 211 3/19/07 - FINANCE - BILL 060052, ETC. in deteriorating air quality, degraded water and devastating urban heat islands. Traditional roofs generate intensive reflective heat. In warm climates when air temperatures can reach 95 degrees Fahrenheit, which we unfortunately can feel here in Philadelphia, or higher during the summer, roof surface temperatures can reach 175 degrees Fahrenheit. An increase in outside air temperature over roof surfaces contributes to and accelerates the chemical reaction that causes low atmospheric ozone, a primary component of smog. So I think we all know that black roofs are hot. We have a lot of them in Philadelphia, so we need to start covering some of them up, making them green and making them function as much more than just a roof over our heads. There is an opportunity for leadership here. In the past year or two we have seen a tipping point, an interest 212 3/19/07 - FINANCE - BILL 060052, ETC. regarding sustainability and energy efficiency in the media and general public. Pick up any magazine and the word "green" is on it. High energy costs and global warming concerns have been a catalyst to create a dialogue about what we can do as communities. Roofs are the fifth facade of a building and are underutilized. A long-term goal should be a comprehensive plan to address all roofs of Philadelphia.

So in conclusion, I just want to go over once again the many benefits of green roofs, and they are a single strategy of green building that provides many benefits: cleaning and retaining rain water; controlling stormwater runoff; reducing erosion and pollution; improving overall water quality; reducing urban heat island effect; more than doubling the service of the life of the roof; conserving energy, which means lower heating and cooling bills; reducing sound reflection and transmission; 213 3/19/07 - FINANCE - BILL 060052, ETC. creating wildlife; and, oh, by the way, they're a heck of a lot prettier than a black roof. The quality of life in Philadelphia will improve when these issues are addressed in a proactive, collaborative and integrated manner. Incentives like the green roof tax credit will increase dialogue and encourage widespread adoption of these practices, making Philadelphia a better city to live and work in. Thank you very much.

Thank you very much. I assume this is our last witness today. Thank you very much. Please identify yourself for the record.

Good afternoon. I believe I'm the last speaker, so thank you for your patience and listening to all of us and thank you for giving us the opportunity to speak. My name is Christine Knapp. I'm the Eastern 214 3/19/07 - FINANCE - BILL 060052, ETC. Pennsylvania Outreach Coordinator for Citizens for Pennsylvania's Future, also known as PennFuture. PennFuture is a statewide environmental advocacy organization. We work to dispel the myth that there must be a choice between the environment and the economy, but rather that a strong economy and a clean environment are intrinsically linked. I'm also the local coordinator for the Next Great City initiative. The Next Great City is composed of over 80 organizations here in Philadelphia, all working for the implementation of ten common-sense, cost-effective policies that we believe will improve the neighborhood environment in our city. While the Next Great City Coalition did not make a recommendation specifically about green roofs, we fully back this incentive to create green roofs throughout the City. Our report does recommend green building practices that reduce the environmental impact that 215 3/19/07 - FINANCE - BILL 060052, ETC. building makes on the environment. Creating a green roof is just one of many ways a building can be environmentally responsible and economically smart. Green roofs offer several cost-saving opportunities for the building owner, reduce energy bills in heating and cooling costs. They are estimated to last twice as long, which we already covered earlier. I won't go into that. And for new construction, green roofs also have the potential to reduce the amount of insulation and roof drains that are used for the building. There's many other benefits that have been gone over: sound insulation, the aesthetic appeal, places for recreation. And public policies that support green roofs will help create jobs for suppliers and manufacturers of roofing membranes and drainage layers and light-weight soils and other products that are used in the construction, and also creates jobs for our gardeners, 216 3/19/07 - FINANCE - BILL 060052, ETC. contractors, landscapers, design and engineer professionals as well. The community as a whole benefits from the addition of green roofs in the neighborhood. Areas that experience flooding will appreciate the reduced burden that the building will place on the sewer system. Councilman Kenney mentioned South Philadelphia as an example, which is where I live, and I can speak personally to the sewer back-ups that happen in our neighborhood. Green roofs would just be one way to address that problem, which has made some of my neighbors move out of the neighborhood. A building with a green roof also reduces the amount of ozone and greenhouse gases and the urban heat island effect, which is also already mentioned, and help the City address global climate change. And we already covered how green roofs help reduce air pollution and water pollution. 217 3/19/07 - FINANCE - BILL 060052, ETC. Despite all that we know about the positive effects of green roofs, they are not yet common practice in Philadelphia and, in fact, North America as a whole has lagged behind other parts of the world in understanding the market and the public benefits of green roofs. In Europe, government legislative and financial support at both the state and municipal level have led to the wider use of green roofs, and the technology there continues to grow. This tax credit would be an excellent step towards doing what many European cities and countries have done in helping incentivize and promote green roofs. Additional next steps should include changing the way stormwater fees are collected to be based on how much paved surface a property has rather than based on how much water it uses as it is now. An opportunity to examine the way fees are collected will come next year, which I hope Council will take a look at. 218 3/19/07 - FINANCE - BILL 060052, ETC.

In the meantime, this is another great way to incentivize green roofs and I urge you to approve and support this. Thanks very much for your time.

Thank you very much. I assume that is it from the community. We will now bring forward Bill Kramer, Philadelphia Planning Commission, and Nancy Kammerdeiner, our Revenue Commissioner. While they're coming forward, I will say I think it would have been stronger had the legislation included mandatory care. I mean, we don't need weeds on our roofs, just as we don't need weeds on the ground.

Madam Chair.

Unless I missed it, I didn't see it within the legislation.

Madam Chair, so I can explain for the record. 219 3/19/07 - FINANCE - BILL 060052, ETC. A business would have to agree to take advantage of the tax credit in order to get the green roof going. Once it's their business, it's their responsibility. It would be no public responsibility. So, for example, we're in discussion with -- we're trying to get a discussion started with Ikea and some of the other big boxes down there. If they had agreed to put on the roof, they would also be agreeing to the maintenance of it. And a lot of these systems are very low maintenance. It's not something you need to do regularly. And it's their responsibility and they would acknowledge that responsibility by participating in the program. So there would be no City Rec Department employees up there mowing grass.

Thank you. Thank you for your patience. COMMISSIONER KAMMERDEINER: 220 3/19/07 - FINANCE - BILL 060052, ETC. Good evening, Councilwoman Blackwell and members of the Committee of Finance. Nancy Kammerdeiner, Revenue Commissioner, and I'm pleased to be with you today to present testimony regarding Bill No. 7 070072. This bill would amend Chapter 9 19-2604 of The Philadelphia Code, entitled "Business Privilege Taxes," by providing a "green roof tax credit" for costs incurred to erect a "green roof" that supports living vegetation. If this bill is approved, a business interested in obtaining a tax credit would first submit plans for the green roof, along with a written analysis prepared by a roof engineer confirming that the structure can support the green roof, to the Department of Licenses and Inspections for review. Once they have received all required permits and approvals from L&I, they submit proof of those approvals to the Department of Revenue with a tax credit application. 221 3/19/07 - FINANCE - BILL 060052, ETC. Revenue will execute a commitment letter with the applicant confirming that the green roof will cover at least 50 percent of the building's roof or 75 percent of the total roof space that can support a green roof, whichever is greater, the maximum credit that can be claimed, and a commitment to maintain the green roof for at least five years after completion or else they have to repay the tax credit. An applicant can claim a tax credit of percent of all costs 15 incurred to construct the green roof, not 16 to exceed $100,000. It shall be applied 17 against the applicant's total business 18 privilege tax liability for the tax year 19 during which the applicant certifies 20 completion of the green roof. Credits 21 unused in that year may be carried 22 forward until fully used. Only one green 23 roof tax credit can be obtained per 24 building, but such credit can be obtained 25 for each building owned by the applicant. 222 3/19/07 - FINANCE - BILL 060052, ETC. If approved, this credit would be effective for the tax year 2007 and thereafter. The costs to the City's General Fund of this tax credit would be dependent upon the number of businesses that opt to create a green roof. There would be no way to predict or estimate this in advance. This would be particularly problematic if the creation of green roofs gains popularity and there are a growing number of applications for the maximum tax credit. Indeed, any reduction in revenue would have an adverse impact on the General Fund, which is already facing more demands for expenditures than can be met by anticipated revenues. The more successful the green roof tax credit program, the more strain it would place on the General Fund. The Administration supports the creation of green roofs as one of many aspects of sustainable design. And 223 3/19/07 - FINANCE - BILL 060052, ETC. you'll hear from my colleague from the Planning Commission in a few moments about the performance-based incentives the Water Department is developing for environmentally friendly methods of dealing with stormwater and the design standards the Planning Commission is promoting. Sustainable design incentives deserve to be sustainable as well. The tax rate for the gross receipts portion of the BPT has been reduced gradually over the last decade and is scheduled for further reductions in the next few years. There have been frequent proposals for the elimination of the gross receipts portion of the tax and some for the reduction or elimination of the net income portion of the tax as well. As the BPT liability of businesses declines, a credit against this tax would provide a decreasing incentive for the creation of green roofs. I urge you to work with the Administration to develop broad-based 224 3/19/07 - FINANCE - BILL 060052, ETC. incentives for environmentally efficient construction instead of this narrowly based tax credit.

This concludes my testimony and I'll turn to my colleague from the Planning Commission.

Thank you, Commissioner. Mr. Kramer.

Good evening, Chairman Blackwell, members of the Finance Committee. I am William Kramer. I'm the Senior Zoning Planner in the Development Planning Division of the Philadelphia City Planning Commission. I am here today to testify on Bill No. 18 070072, which was introduced by Councilmember Kenney on February 8, 2007. This bill would provide a tax credit of percent of the cost of constructing a 22 green roof, up to a maximum amount of 23 $100,000. 24 As a leading agency in the 25 development review process, the City 225 3/19/07 - FINANCE - BILL 060052, ETC. Planning Commission strongly and wholly supports the use of environmentally friendly stormwater management practices that serve the best interest of the citizens of the City of Philadelphia. We recognize that these can take many forms, including green roofs, infiltration islands, porous sidewalks and asphalt and rain gardens. The traditional methods of handling stormwater have created runoff volumes identified as the number one source of pollution for rivers and streams nationwide. Here in Philadelphia we have witnessed the impact of increased runoff in recent years, as evidenced by flooding basements, washed-out creek banks and damaged roads and bridges. While all agencies involved in the development process recognize the value of promoting green roof technology, we feel this bill represents an incremental approach that would more appropriately be incorporated into a 226 3/19/07 - FINANCE - BILL 060052, ETC. broader set of incentives in a manner that would not impact the City's strained revenue stream. The rest of my testimony will include an examination of the proposed green roof benefit in comparison to the Water Department's existing incentives, as well as outlining other work in the area of sustainable design currently underway. Since 1995, the Water Department has been focusing on safe and environmentally friendly stormwater management, and the Planning Commission has been a part of those efforts. This has led to the adoption of a new stormwater regulation effective January 2006. These regulations require developers to handle more of the stormwater runoff on site before the water reaches the combined storm/sewer system. The fees charged for stormwater runoff create an incentive to install roofs, because the water absorbed by the 227 3/19/07 - FINANCE - BILL 060052, ETC. green roof significantly decreases stormwater runoff. 85 per square foot per year in fees. For a 10,000-square-foot roof, assuming a 30-year lifespan, this amounts to a savings of $18,000. The $18,000, which equals approximately 37 percent of the proposed tax credit of $50,000 for the same roof, does not take into account the capital cost savings avoided by not meeting larger, more expensive piping and devices, nor does it include the operational savings due to decreased energy use. If both of these cost savings were added to the savings from reduced rates, the economic benefit for the roof would increase significantly and could very well equal or exceed the value of the tax credit. While the Planning Commission supports the goal of promoting green roofs, we do not favor this bill for 228 3/19/07 - FINANCE - BILL 060052, ETC. several reasons. First, the Water Department is already working to establish additional incentives for green roofs, not only through its new regulations and stormwater fees but also by launching a program to expedite reviews for projects incorporating green technologies. Second, the Planning Commission feels that this legislation, while right in its intent, does not go far enough to promote sustainable design citywide. The Planning Commission is working with a number of City departments to promote LEED-certified designs and we are considering ways to "green" our land use and capital investment policies. Green roofs are only one of many design strategies we must consider.

Rather than adopting an ordinance targeting one practice, which may not be feasible to use in all locations, the Planning Commission favors the use of the LEED standard -- that's Leadership in Energy 229 3/19/07 - FINANCE - BILL 060052, ETC. and Environmental Design -- that applies to a range of performance-based incentives to cover all aspects of sites and building. I have attached a copy of the LEED rating system to my testimony for your information. Finally, this proposed tax bill 9 proposes to take funds from the business privilege tax, a strained revenue source that will be decreasing in future years. This point has been covered more completely this evening by the Revenue Department. This concludes my testimony. I appreciate the opportunity to appear before you on this important issue and would be pleased to answer any questions you may have. Thank you.

Thank you, and thank you for your patience in agreeing to the other witnesses going first. Are there any questions? 230 3/19/07 - FINANCE - BILL 060052, ETC.

I just wanted to just comment quickly on some of the testimony here. First of all, the Revenue Commissioner is correct, we don't know the impact, and if we have a serious impact in the next three to five years, we certainly can adjust it. I do think that the economic incentive and not the penalty side of it -- we're not penalizing anybody who doesn't do it. We're trying to incentivize it -- is a way to kick-start this important effort. Certainly this Council, along with the Administration, has the ability to adjust those numbers. I don't think it's an extravagant amount of money and I do think it's worth taking the chance, considering the benefits that we're going to derive in other areas of not having to treat stormwater in areas of -- just, in general, a benefit to the City both from a subjective and a scientific way, I 231 3/19/07 - FINANCE - BILL 060052, ETC. think it's worth taking the chance. As far as the Planning Commission's testimony is concerned, I don't see that there's anything that passing this bill is going to do to inhibit or impede any other efforts that they or the Water Department or any other department is making, but is a way to highlight the City's long overdue entrance, public entrance, into this important field. So I don't think that passing this bill is going to stop or halt or alter any of the Planning Commission or Water Department's plans, and I do think that the economic uncertainty that we're entering into potentially is not that dire that we shouldn't take the chance. Thank you.

Thank you very much. Are there any other questions? Yes, sir. MR. PATRICK McDONALD: I know 232 3/19/07 - FINANCE - BILL 060052, ETC. you guys want to get out of here. I just wanted to address one thing that you said along the lines of since 1975 there's been an effort to address issues such as this and other things. Again, I want to impress upon you all that four years ago, I -- three years ago, I went to the Watersheds Department, the Water Department, the Planning Department and numerous people in L&I and asked them what kind of litigation or permits or anything else planned that I would need as a plumbing contractor to put in a rainwater harvesting system or a green roof. Not one single person from the City had any idea what it was, until I was told by an engineer in the Watersheds Department, Just do it. Two years after I accomplished this goal of taking this on myself with all expense out of my pocket, I was asked by Glen Abrams from the Watersheds Department, Water Department, to come and receive an award for the work that I did 233 3/19/07 - FINANCE - BILL 060052, ETC. out of pocket. So I just ask that the Councilpeople to understand that by not supporting this bill and by looking at our environment as the number one issue that we have over and above all of the other issues that we have, as urban communities right now, what we're essentially doing is we're telling the rest of the world, along with our citizens, that we don't need anything implemented other than what our Planning Department and what our L&I Department has going right now. So I just ask for the support and understanding. Thank you.

Thank you very much, Mr. McDonald. Any other questions or comments? (No response.)

Thank you very much. That will conclude our hearing and we will enter into our stated 234 3/19/07 - FINANCE - BILL 060052, ETC. meeting. The Chair recognizes Councilman Ramos with regard to a motion for Bill 5 No. 060389 and also for a suspension of the rules.

Thank you, Madam Chair. I move that Bill No. 060389 be reported out of Committee with a favorable recommendation and further move that the rules of Council be suspended to permit first reading of this bill at our next Council meeting. (Duly seconded.)

It has been moved and seconded that Bill No. 17 060389 be reported out of Committee and, furthermore, that we entertain a suspension of the rules so that we may hear this at our next session of Council. All in favor will say aye. (Aye.)

Opposed? (No response.) 235 3/19/07 - FINANCE - BILL 060052, ETC.

The ayes have it and the bill passes. The Chair recognizes Councilman Greenlee with regard to a motion with a suspension of the rules for Bill No. 7 070150.

Thank you, Madam Chair. I move that Bill No. 10 070150 be reported out of this Committee with a favorable recommendation and that the rules of Council be suspended to allow for first reading at the next session of Council. (Duly seconded.)

All in favor will say aye. (Aye.)

Opposed? (No response.)

Bill 23 070150 has been moved, seconded and reported out of Committee with a favorable recommendation and also a 236 3/19/07 - FINANCE - BILL 060052, ETC. recommendation for a suspension of the rules so that it may be considered at our next session of Council. The Chair recognizes Councilwoman Blondell Reynolds Brown for a motion with regard to Bill No. 070169 and also for a suspension of the rules.

Thank you, Madam Chair. I move that Bill No. 070169 be reported out of Committee with a favorable recommendation and further move that the rules of Council be suspended so as to permit reading at the next scheduled session of City Council. (Duly seconded.)

All in favor will say aye. (Aye.)