COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, June 6, 2000 9:45 a.m. - - - BILL 000344 - an Ordinance authorizing the Mayor, on behalf of the City, to file an application with the United States Department of Housing and Urban Development for Community Development Block Grant. - - - PRESENT: COUNCILWOMAN JANNIE L. BLACKWELL, Chairwoman COUNCILWOMAN MARIAN B. TASCO, Vice-Chair COUNCIL PRESIDENT ANNA C. VERNA COUNCILMAN FRAN DiCICCO COUNCILMAN JAMES F. KENNEY COUNCILMAN DAVID COHEN COUNCILMAN MICHAEL A. NUTTER COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN ANGEL L. ORTIZ COUNCILMAN DARRELL L. CLARKE - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center Plaza, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 I N D E X BILL 000344 PAGE John Kromer, Director, Office of Housing and Community Development----------------------- Deborah McCullock, Deputy Director, Office of 5 Housing and Community Development----------- 27 Kevin Brooks, Assistant Director, Equal 6 Opportunity Employment and Training, Office of Housing and Community Development-------- 52 7 Belinda Mayo, Director, Neighborhood Program Coordination and Community Development, Office of Housing and Community Development--------------------------------- 116 Clorise Wynn, Acting Deputy Director, Department of Commerce---------------------- 142 Curtis Jones, President and CEO, PCDC---------- 148 David Boyd, VP Neighborhood Commercial Revitalization, PCDC------------------------ 156 James O'Toole, Representative, Department of Commerce------------------------------------ 159 William Hankowsky, President PIDC-------------- 165 Lee Capkin, Ph.D., Executive Director, Housing Consortium for Disabled Individuals--------- 168 Gloria Guard, Representative, People's Emergency Center---------------------------- 173 Benjamin Dugan, President, Powelton Village Civic Association--------------------------- 181 Taylor Frome, Founder, YouthBuild Charter School-------------------------------------- 185 Danatay Jones, Former Student, YouthBuild------ 187 Angel Rodriguez, Executive Director, YouthBuild---------------------------------- 189 Joanne Jackson, Executive Director, ACDC------- 194 Mary Curry, Member, ACORN---------------------- 198 Jeff Ordower, Office Director, ACORN----------- 199 Sloane Folks, Director, Economic Development, Frankford Group Ministries------------------ 203 Suzanna McQuillan, Director, Real Estate Development, Frankford Group Ministries---- 207 Michelle Lewis, President/CEO, Northwest Counseling Service------------------------- 210 Denis Murphy, Board President, Homeownership Counseling Association--------------------- 219 Khalil Walker, Program Director, Housing Association Information Program------------ 230 3 I N D E X (Continued) BILL 000344 PAGE Bitraie Roy, Representative, Philadelphia Green Program, The Pennsylvania Horticultural Society---------------------- 237 Vivian Van Story, Executive Director, Community Land Trust Corp.----------------- 241 Evelyn Feeney, Office Manager, Community Land Trust Corp.-------------------------------- 244 Eileen Brown, Assistant Director/President, Grandparents as Parents-------------------- 247 - - - 4 BILL NO. 000344
Good morning. It is great to see all of you on this stormy day, however an exciting day for community development. Having said that, the Finance Committee is happy to call into session a hearing to consider the Community Development Block Grant application. The clerk will read the title of the bill as soon as we get the microphones straight.
Bill No. 000344, an Ordinance authorizing the Mayor, on behalf of the City, to file an application with the United States Department of Housing and Urban Development for Community Development Block Grant as required by Section 104 of Title 1 of the Housing and Community Development Act of 1974, P.L. 93-383 as amended, including all understandings and assurances therein and designating the Mayor and the Director of the Office of Housing and Community Development, Housing Director, as the authorized representatives of the City, to act in connection with the application, to provide such additional information as may be required, and to accept the grant under certain terms and conditions; and further authorizing the 5 BILL NO. 000344 Housing Director to file an application including all understandings and assurances therein, with HUD to participate in the home investment partnership program under Title 2 of the National Affordable Housing Act of 1990, P.L. 101-625, and to take any and all other necessary action to participate in that program; and further, authorizing the Housing Director, on behalf of the City, to file an application with HUD for housing opportunities for persons with AIDS, AIDS grant, under the AIDS Housing Opportunity Act, 42 USC 12-901, including all understandings and assurances therein, and to take any and all other action necessary to participate in that program; and, further, authorizing the Housing Director to file an application, including all understandings and assurances therein, with HUD to participate in the Emergency Shelter Grant program under Title 4 of the Stuart B. McKinney Homeless Assistance Act of 1987, as amended, P.L. 102-550, and to take any and all other action necessary to participate in that program; and further, authorizing the Managing Director, on behalf of the City, to file an application or applications, and, if an application 6 BILL NO. 000344 is accepted, to execute a contract or contracts to obtain grants from the Commonwealth of Pennsylvania, the Commonwealth, under the Act of April 12, 1956, P.L. 1449, Section 4, as amended to prevent and eliminate blight; and further, authorizing the Mayor to file an application or applications, including all understandings and assurances therein, with HUD to use the Section 108 Loan Grant Program, to enter into agreements with HUD to implement the loan guarantee program, and to take any and all other action necessary to participate in the Section 108 Loan Guarantee Program. Thank you.
Thank you very much. For the purposes of a quorum, we have to my left Councilwoman Tasco, Vice-Chair of the committee; to her left, Councilman Cohen; to my right, Councilman Nutter; and we know that Councilman W. Wilson Goode is here, as well. So a quorum being present, we can formally begin. Mr. Kromer, we welcome you here this morning. Does any member of the committee want to make an opening statement? If not, we will call 7 BILL NO. 000344 on Mr. Kromer to begin. Thank you for your patience.
Madam Chair, just for a moment, I do have an amendment we are going to offer to the bill. I do have to go to the Gas Commission meeting. I will be back in about 45 minutes.
Good morning. My name is John Kromer. I am director of the City of Philadelphia Office of Housing and Community Development. I am very pleased to have an opportunity to present the proposed consolidated plan for Community Development Block Grant Year 26, Fiscal 2001, today. I believe Council Members have received copies of my written testimony. Rather than repeating it, I will just highlight some information about the sources of funding for the proposed program year. The primary source of funding, again, 8 BILL NO. 000344 this year is the Federal Community Development Block Grant. And during the coming fiscal year, the city anticipates receiving $69 million in block grant funding, plus an additional $8.4 million in program income generated from loans and repayments from prior years. In addition, approximately 1.6 million of prior years' funds is being proposed for reprogramming so that it can be spent during the coming fiscal year. The second major source of funding for the Community Development Block Grant program is the Federal HOME Program. And during the coming fiscal year, the expectation is that Philadelphia will receive approximately 14.7 million in Federal HOME funds. Another source is the so-called HOPWA Program, Housing Opportunities for Persons With Aids. And our expectation is that approximately 3.7 million in HOPWA funds will be available during the coming fiscal year. A fourth funding source is the Federal Emergency Shelter Grant. And our 9 BILL NO. 000344 expectation is that the city will have approximately $2.4 million from that source. Finally, the city will be repaying financing made available in prior years to the Section 108 loan program. And the loan repayment projected for the coming fiscal year is approximately $13.5 million. In addition, using available loan authority, the city proposes to obtain $10.5 million in new Section 108 financing for housing activities. Those are the primary sources of the funding for the program. The uses of funding are described in the proposed consolidated plan for Year 26. This is a transition year plan. There are no major new program activities or new goals and priorities that are proposed in the plan. It is largely a continuation of existing programs. Those programs have been quite successful. The Sales Housing Development, Rental Housing Development Program, the Homeless and Special Needs Housing Program, our First Time 10 BILL NO. 000344 Homebuyer Programs, and others have been quite successful, and funding is proposed to continue those activities. One relatively small new activity that is proposed is a Request for Proposals that would be issued during the coming summer months, by the Redevelopment Authority, to invite developers, both private developers and nonprofits and community development corporations, to apply for acquisition and/or predevelopment funding for their next development ventures. In that way we would expect to build up a new pipeline of housing production ventures for the coming years. Representatives of other agencies proposed to be supported through the Community Development Block Grant program, including the Redevelopment Authority, the Philadelphia Housing Development Corporation, the Commerce Department, are here to testify and to answer any questions that Council Members may have. In addition, representatives of the Philadelphia Housing Authority are available to answer any questions that may be raised regarding 11 BILL NO. 000344 public-housing-related elements of the consolidated plan. Thank you.
Thank you very much. Do we have questions from members of the committee for Mr. Kromer? Are there questions? Councilman Goode.
"Program income" is funding generated from program activities, and in this case activities such as repayment on loans and land sales, sales of real estate.
And what are the sources of program income specifically by agencies? You mentioned loans by, I guess, lending agencies. But what are the different sorts of program income?
I believe we have a breakdown of that. But, as you might expect, the loan repayments are from the family development agencies, 12 BILL NO. 000344 PIDC and PCDC. The sales of real estate are conducted by the two housing agencies, the Philadelphia Housing Development Corporation and the Redevelopment Authority. If it will be helpful, we can provide a breakdown of the specific sources of that program income during the coming year.
Because of the nature of program income, shouldn't program income always be increasing over time, generating income, and then being reinvested, then generating more income?
Program income certainly is a valuable resource. But some of the activities in the program do not generate program income, but, nonetheless, have been supported because they are valuable in themselves. For example, home repair grants for people with critical housing emergencies won't generate program income. The idea of charging a repayment, or setting up a repayment, we felt, would be cumbersome 13 BILL NO. 000344 and would result in a drop in participation in the program. Homeless housing development is critically important, but generates no program income. So I think a balance that has to be achieved between activities that do generate program income and other activities which have value.
Is program income ever used for administrative costs, or is always reinvested in more income-generating activity?
I believe it is accurate to say that most of the program income is reinvested. And I believe that the largest consistent source of program income has been the PIDC loan program, which again cycles back to future loans.
I understand you said we need to strike some sort of balance. But should we not be investing or shifting more entitlement spending to income-generating activity?
In this budget we have to make some fundamental decisions about how to use 14 BILL NO. 000344 the resources that are available. We're in a very difficult situation, which we have had several years of high performance, a lot of activity, a lot of value to the city, but no substantial increase in funding. And, in that situation, when we make a decision such as the decision to increase activities that generate program income, the question is, who gets cut, and where do we take the resources from.
So as a long-term strategy, if we are ever afraid of losing Community Development Block Grant entitlement dollars, should we just be investing those dollars in income-generating activity?
My feeling off the cuff -- and I think a lot more discussion of this issue is needed -- is that the place to generate program income is through economic stimulus type activities that are funded with funding that's more flexible than the block grant, it is not income restrictive. The exception of that is, of course, the Section 108 financing of economic development 15 BILL NO. 000344 activities. But even there, I think the opportunity it modest. So, again, off the cuff, I would suggest that nonCDBG funding, to the extent that it is available, would be the best source.
I don't if you have a real number for this or a good guess. Do you know how much private capital is actually leveraged from entitlement spending of how much is projected to be leveraged from the spending of this proposed block grant?
I don't even have a guess, but we could give you that information fairly quickly. And the kinds of sources of private capital would include sources such as mortgages that are leveraged as a result of our counseling and settlement assistance, rehabilitation loans that are leveraged through the Redevelopment Authority's bill 21 loan program, private investment equity that's leveraged through the tax credits, deals which involve city subsidizing. So we could --
We don't know off hand how much private capital is leveraged, going to 16 BILL NO. 000344 be leveraged, from this roughly $70 million?
I couldn't say, but I can give you a good estimate before the end of the day, because those figures are available.
Okay. Do we have any plans to begin to strategize towards trying to leverage private capital from a more creative use of these dollars? I mean, how might we leverage more private capital?
The biggest opportunity in terms of housing programs, per se -- and I believe the representatives of the economic development agencies is going to speak for those agencies -- but the big opportunity in terms of housing is the low Income Housing Tax credit. The leveraging opportunities are really phenomenal. And Herbert Wexall from the Redevelopment Authority can provide a more accurate picture of this. But within the last couple of years, a tax credit investment equity has made up as much as 75 or 80 percent or more of a development venture funded through this resource. 17 BILL NO. 000344 Our problem has been that, within the past year, the Pennsylvania Housing Finance Agency has restricted Philadelphia's ability to obtain as much tax credit financing as it had. And I hope that part of our agenda for the coming year will be to try to loosen up that cap that's been imposed on Philadelphia so that we can take advantage of that leveraging. Again, on the economic development side, some of the economic development agencies could address that question.
Thank you very much. I noticed we have a sheet that has presented the housing production since '95 to now. And of course you know I am always interested in the 9th Councilmanic District. And there appears to be no 24 expenditure of dollars in the categories of neighborhood-based rental, neighborhood-based 18 BILL NO. 000344 homeowner, special needs housing, home start, not since 1995 there was $498,000 spent for neighborhood-based rental. Could it be that there were no 6 requests for these dollars, or maybe there were requests and not approved? How would I know if someone requested something and it wasn't funded, or if we just didn't get any requests for these categories?
Most of the funding that has been made available in those categories, which covers housing production, you know building new houses or rehabilitating vacant structures, has been made available through a competitive Request for Proposals process. And, in every instance, the responses to the RFP were reviewed with the District Council Members to deal with any local issues that Council Members might have been aware of. I think there are two issues that relate to the 9th District. One is that there is not as much vacant property in the district to develop as there is in other districts, not only in the 5th, but also 19 BILL NO. 000344 in the 2nd and 3rd District. And so the opportunities to develop vacant property are not as great. Secondly, there are fewer developers, community development corporations and others, available to do that. However, in terms of looking forward, looking to the future, you know, what is it, what's in it for the 9th District in this RFP that I mentioned a couple of minutes ago, there will be an opportunity for civic groups to partner with private developers and structure a response to the forthcoming RFP so that the 9th District could be included, and as many proposals could be generated from the 9th District as there was interest in development. In past years, the Office of Housing and Community Development has supported a limit on the number of funding awards a developer could receive. There was a one-project-per-developer rule. That rule was ended a couple of years ago. And so a private developer could venture with a number of civil groups to respond with the Requests 20 BILL NO. 000344 for Proposals. In an area like the 9th District -- and I haven't studied this carefully -- I would expect to see more activity in the preservation programs. And if you look at that page at Heater Hotline, for example, there are 298 cases shown on the chart in the 9th District. Under Settlement Grants, 402 is the second highest in the city. So I would expect that the 9th District would be higher on the preservation side.
As you know, I share some of the same concerns as my colleague, Councilwoman Tasco. And whether it is from the charts provided either by my office, which I shared with you I believe last week, or the Chair I know has 21 BILL NO. 000344 done some chart work as well, one of the things we find -- and this is consistent with all of our past discussions -- is that different neighborhoods have different needs. And while whether it is the 9th or the 4th or some other areas may not have high needs in the neighborhood-based rental area or possibly even neighborhood-based home ownership, that does not mean that those communities don't have a certain level of need, but it is a different need than what other communities have. And so I will also spend some time in the chart area in talking about where the funding is going, and pleas for the neighborhoods that are getting good funding support, and would like to see them continue to get funding support for their needs. But that does not mean that other communities don't have a need, and shouldn't have access to these dollars and participate to the greatest extent in the Community Block Development Grant Program. Because the funds are sent to Philadelphia to serve, I believe, all Philadelphians 22 BILL NO. 000344 based on low- and moderate-income status; is that correct?
Low- and moderate-income status is one of the criteria for determining the amount of funding. But that's certainly correct.
Other criteria including housing agency and condition of existing housing stock.
Okay. But that, again, does not mean that just because you don't have as high a level, for instance, of property in a particular area, that those people don't at least have an opportunity, if not a right, to try to access funds based on programs and services that are available.
Okay. Can you provide a list or breakout in funding that you propose in Year by the eligibility categories as 22 detailed in the Code of Federal Regulations that 23 govern this particular area? 24
Let me make sure I 25 understand the request. 23 BILL NO. 000344 Break down the program activities and specify the eligibility that's associated with each activity?
Yes. For instance, in the memo from Ms. McCullough, to you, dated March of 2000, in 8 response to a request by Councilwoman Tasco at the 9 Council budget hearings earlier this year, that memo lays out the eligibility categories for CDBG funds. And they are as follows. CDBG funds may be used for the following broadly defined activities: 1, acquisition; 2, disposition; 3, public facilities and improvements; 4, clearance activities; 5, public services; 6, interim assistance; 7, payment of nonfederal share; 8, urban renewal completion; 9, relocation; 10, loss of rental income; 11, housing services; 12, privately owned facilities; 13, construction of housing; 14, home ownership assistance; 15, microenterprise assistance; 16, technical assistance; and, 17, assistance to institutions of higher education. Can you take the CD Year plan and 24 give us a detailed accounting of how the plan 25 responds to those 17 items? 24 BILL NO. 000344
Yes, I would be glad to do that. And I believe we can respond to that in short order. Although this isn't fully responsive to your request, the proposed consolidated plan does list the activities and contains a federal citation. But I think what is here is much broader than what you are looking for.
This is the portion of the plan that begins following . It is a series of horizontal charts that describes the program activities and then the citations. But, again, I think this is much more general than what you have requested, and we can certifiable respond.
That's right. You can see the middle column that says, "HUD Matrix Code/Title Citation."
After the blue 25 BILL NO. 000344 area? After the blue budget area?
Exactly. But I understand your request, and we can provide the level of detail that you have requested.
I would appreciate it. In the plan, I believe it is in Appendix 4, there is a chart that lists Section 8 Eligibility Reference Table, Annual Income.
Down in the small print, it says, "These figures are based on the Section 8 annual income limits for low- and moderate-income households set by the U.S. Department of Housing and Urban Development, HUD, effective March 9, 2000. HUD defines 50 percent of area median income as very low income and 80 percent as low income. The definition of 'very low,' 'low,' and 'moderate income' in this table are based on City Ordinance 1029-AA, which defines 50 percent of area median income as low income and 80 percent as moderate income." Can you explain what you were trying BILL NO. 000344 to explain in that detail, and what is the difference, and how are you able to have different definition than what HUD has defined?
Excuse me. Before you answer, Mr. Kromer, may we pause. The president has an announcement to make.
Yes. Thank you. Thank you very much Councilwoman. We had a Rules Committee hearing scheduled for 10 o'clock this morning on Bill 282. That is being recessed until Tuesday, June 13 at 10:00 a.m. Thank you.
Thank you. In response to your question -- and I may need some help from the experts here -- I believe that the fine print is saying that the category that is defined by the federal government as very low income is defined locally, through Ordinance 1029-AA, as low income; and the federal category that is defined as low income, that is 80 percent of area median, is defined by this ordinance 25 as moderate income. 27 BILL NO. 000344 If you would like a fuller explanation of that, I think there are people here who can provide that. I'm not sure of the reason for that categorization.
Yes. MS. DEBORAH McCULLOCK: Good morning. My name is Deborah McCullock. I am the Deputy Director of the Office of Housing and Community Development. The distinction here is based on City Council Ordinance 1029-AA. Council passed an ordinance that is more restrictive for spending in the City of Philadelphia than the federal guidelines.
What does that mean? MS. McCULLOCK: That means that we are obligated to spend money to serve low- and moderate-income people by --
Can you speak directly into the microphone, instead of away from it. 28 BILL NO. 000344 MS. McCULLOCK: Sorry. The ordinance, the 1029-AA ordinance, defines low and moderate income more restrictively than the federal government does. And so when we follow the guidelines for low and moderate income, we are following the guidelines of City Council Ordinance 1029-AA.
How are we able to redefine what HUD defines for its own program? MS. McCULLOCK: Because we are making the more restrictive, which is --
What does "more restrictive" mean? MS. McCULLOCK: It means strengthening the eligibility. The eligibility for low income is harder to meet in the City of Philadelphia than it is for other federal -- in other places where they are following the HUD guidelines.
Why don't we take it from a different perspective. Is it accurate to say that it means that fewer moderate-income people are possibly getting served as a result of this more restrictive 29 BILL NO. 000344 definition? MS. McCULLOCK: Yes, I think that's accurate.
I can't hear you. MS. McCULLOCK: Yes, I think that's accurate.
And why is that? MS. McCULLOCK: Because of City Council 1029-AA, that the City Council passed an ordinance to ensure that CDBG funds would be spent on the lowest-income-eligible people, the neediest people, if you will; that that's what the -- what was the point of the ordinance that was passed.
But what are the dictates of the HUD policy and the HUD regulations as it relates to low- and moderate-income people? And again I would ask, how is the city in a position to restrict who can receive the funding based on the authorization either by HUD regulations or by Congress? MS. McCULLOCK: Well, HUD would allow -- I want to make sure I explain it carefully. HUD would allow the money to be spent 30 BILL NO. 000344 for anyone below their guidelines, its guidelines, but not above. So if the city -- the city under the block grant program could pass an ordinance or it could propose a plan in which 100 percent of the funding was going to very-low-income people; that would be eligible under HUD guidelines. What would not be eligible would be to have a program that exceeded the HUD guidelines. You could not have a program in which people with incomes higher than the HUD guidelines were being served, but you can have a program where people with the lowest incomes could be.
Or you couldn't say that 100 percent of the funding was only spent on moderate-income people, I am assuming, because the HUD guidelines are low and moderate; is that correct? MS. McCULLOCK: Yes.
What ends up being the difference in terms of the categories or income eligibility universes, if you will, of people who would be served under the HUD guidelines, versus the more restrictive guidelines as established by 31 BILL NO. 000344 Ordinance 1029-AA? Now, do you recall when that ordinance was passed? MS. McCULLOCK: I don't know the exact year, but it was in the mid '70s. I would say -- I want to say.
Mid '70s, early '80s. MS. McCULLOCK: I beg your pardon. Early '80s. I mean, we could get you that exact date. I just don't know it off the top of my head.
What would be the difference in the universe of people who would be served under the HUD guidelines versus the universe of people who can only be served under the mandates of 1029-AA? MS. McCULLOCK: On this chart, it would be people whose incomes fall between moderate -- what's labeled moderate and what's labeled middle. So that just to use the first row, for example, household size of 1, under the HUD guidelines, a household with a family size of 1, under the HUD guidelines, that income could go up to 32 BILL NO. 000344 48,600. Under the 1029-AA, it can only go up to 32,350. So the universe of people are those people that fall between, on this chart, 80 percent and 120.
So let me make sure I understand. Under the HUD guidelines for this chart, the person or the household in 1 through 8 plus, under the HUD guidelines, they would allow spending of CDBG dollars for the what's listed here as middle or the 120 percent range and below. MS. McCULLOCK: Correct.
And under the city guidelines, it is only up to what we have listed as moderate, or the 80 percent, 32,350. MS. McCULLOCK: Yes.
So the universe of people who were being left out by the city ordinance are the people between 32,351 and 48,600? MS. McCULLOCK: Correct.
But the people in that category are eligible under HUD guidelines, but they are now made ineligible by a previously passed 33 BILL NO. 000344 city ordinance from the early '80s? MS. McCULLOCK: Yes.
Has any analysis been done of the people who have been left out as a result of that change? MS. McCULLOCK: Not to my knowledge.
Do we know what neighborhoods would be covered or would benefit if we followed the HUD guidelines?
I think we could quickly do an analysis of the census tracts that would be included if the HUD guidelines were in place.
And by this particular ordinance, that means that those neighborhoods are not eligible for any of the CDBG funding; is that correct?
That's right. Although individuals within those neighborhoods who met the low/moderate income criteria would be eligible.
Can you give me a copy of what you made reference to in terms of these Section 8 annual income limits for low- and moderate-income households set by HUD effective 34 BILL NO. 000344 March 9, 2000? Do you have a copy of that?
Thank you. Lastly -- and I know some of my colleagues have their own, some of my other colleagues have their own questions -- I would like to raise again for the record, I'm sure we will have some additional discussion, from the preliminary plan and the hearing at which I did testify back in, I believe, April, or was that early May? April 27. The budget in front of us still maintains the CDBG funding of approximately $69 million, plus the program income, which takes the CDBG line to 79,180,000; is that correct?
Okay. And the administrative costs and the program delivery costs for the program are still $29,703,000.
And that naturally then leaves $49,477,000 to be expended. But, as you testified earlier, Mr. Kromer, we now have the fairly significant repayment of HUD 108 loans, principal and interest, 35 BILL NO. 000344 of $13,561,000; is that correct?
And so that finally leaves for distribution to the groups and organizations $35,916,000?
Okay. And so, for the record, we spend $29,703,000 to then administer $35,916,000; is that correct?
And the reason for the $29 million admin and program delivery costs is because we pay public employees to provide services in these programs by using the federal money that came for program delivery services here in the city?
The program delivery portion of the budget includes funding for those city employees who perform services that get the money out. For example, a loan processor at the Philadelphia Commercial Development Corporation is funded through program delivery. So, in that sense, yes. 36 BILL NO. 000344
And those people are either on the payroll of OHCD, RDA, PIDC, PCDC, a couple of other various agencies?
Again, we have had this discussion, and I am sure we will have some more, any dollars that go into administrative costs or program delivery are dollars that, if they weren't spent on public employees' salaries performing great jobs, those dollars would then naturally end up out on the street to produce more housing or provide more services; is that right?
Okay. So any potential cut in administrative costs or program delivery costs which could be taken up by the city would enable us to put more money out on the street, especially in light of the fact that we now have to take $13 million off the top to make HUD 108 loan repayments?
First, with respect to the city's more severe requirements on income that you were discussing with Councilman Nutter before, you say that arose out of legislation enacted by Council during the 1980s? MS. McCULLOCK: Yes.
Do you know whether that legislation was initiated by City Council, or was passed by City Council at the request of the then Administration, whoever the Mayor may have been? Or at least I think two or three mayors during the 1980s. But was it the Council initiated or Administration initiated?
I think it would be very important to find out whence it comes from. Because there have been complaints in many areas that certain income levels are squeezed; in that they earn too much for certain programs, but don't have enough income to otherwise provide for what appear to be necessary services. I think we've got to go into that very fully and maybe re-examine it. 38 BILL NO. 000344 Do the city laws, as you understand them to be, does it make any allowance for inflationary effects?
The Community Development Block Grant budget certainly does not. We have been struggling with that, as Congress has not increased the budget to keep pace with inflation. Just to respond more fully to your earlier question, I do think it is fair to say that at the time during the 1980s, Council Members were concerned about seeing to it that Community Development Block Grant funding was made available to support the housing needs of low-income Philadelphians. No question.
But I think as a result of inflationary impacts, the needs may be different. Many people who today -- $30,000 today, or 32,000 today, represents a totally different figure than 32,000 in the 1980s. And, therefore, we might have to, even if we maintain the major concept, we may have to make changes in dollar figures, or we may be 39 BILL NO. 000344 omitting serving many people who are in truth low income today, even though what they earn may have been regarded as something well above low income in the 1980s. So I think that standards like that have to be constantly reevaluated.
That's right. And I don't recall any substantive discussion of Bill No. 1029-AA within the last decade. So I think any reconsideration that's proposed would be appropriate.
On the economic stimulus funds that are involved in HUD 108 loans, are they involved at all?
What are the economic loans that 12 or 13 million dollars we were talking about the repayments to, what are they due for? Why do we have to take money out of current year's program to pay back something involving 12 or 13 million dollars?
The repayments are for housing-related Section 108 loans that were taken 40 BILL NO. 000344 out during several years in the past decade to fund a variety of activities. Those activities are listed in the proposed consolidated plan. But there is, as you will see from the plan, quite a wide range of activities. For example, $3 million a year in Section 108 financing was taken out in order to support acquisition and relocation in the Logan triangle area, every year for a period of seven or eight years. Section 108 funding was taken out to leverage the home ownership award that was received for the Cecil B. Moore area in North Philadelphia. Section 108 financing also supports a substantial amount of the homeless and special needs housing. And, on -- Appendix provides a 20 specific list of activities that were funded through that source.
Mr. Kromer, may I have a copy of the Minority Business Participation Report 41 BILL NO. 000344 for projects from 1992 to now? Is it possible?
Okay. Generally can you talk about the status of minority and women participation with regard to projects in the OHCD?
The status of minority and -- minority business participation, I believe, is a critical issue on the housing side of the Community Development Block Grant. Again, the representatives of the economic development agencies can speak to that side of the block grant. The city has several mandates for achieving high participation rates, and, among them, minority and women contractors in activities that are funded through the Community Development Block Grant Program. However, as will be evident from the reports that have been distributed to Council Members, the actual participation is not what it should be. It is substantially lower than I think we would all like to see. And we need to address that problem more than we have. 42 BILL NO. 000344 One significant issue that has a varying on minority business participation on the housing side is the number of minority-owned businesses that happen to be -- have agreements with the building trades. A significant number of the contractors and subcontractors that are working now on Community-Development-Block-Grant-funded jobs have agreements with the building trades, are not minority-owned contractors, and a substantial number are not Philadelphia-based contractors. There is a long history that underlies that issue. And I don't want to imply that the building trades are at fault for the city's failure to meet the standards and meet all the goals of the program. But I believe that this problem needs to be addressed collaboratively by the Administration, working with neighborhood-based contractors, including the minority- and women-owned contractors, and the building trades, so that we can achieve a higher level of participation than what we're showing now.
Yes. In fact, as you 43 BILL NO. 000344 mentioned, I recall that you did say that in our discussions, that that's an area that we need to focus on. Councilman Clarke.
Thank you, Madam Chair. Good morning, Mr. Kromer. Mr. Kromer, I was looking at -- I don't know if you have a copy of this chart that was prepared by Councilman Nutter?
And one thing that jumped out at me was the special needs housing category. Do you see that?
And consistently year after year, there is a substantial amount of special needs in the 5th District. Can you give me a sense of, can you kind of explain what, "special needs housing" is?
"Special needs housing" that is supported through the Community Development Block Grant Program. Is housing for formerly 44 BILL NO. 000344 homeless people and other people who need a combination of affordable housing and supportive services and case management; for example, chronically mentally ill people. The major emphasis, I think it is fair to say, a major emphasis has been transitional and permanent housing for formerly homeless people, people that don't need to be in a shelter, who are ready to move on into a more independent living situation. All of the special needs funding that I believe is represented here involves housing production, new construction, and vacant structure rehab that was awarded as a result of a competitive Request for Proposals process. So that there were opportunities for proposals to be received from different areas of the city, and the areas where responses were received happen to be in the 5th District. And I think there are a couple of reasons for that. And others can speak to this during the course of day. One is that there is a substantial amount of vacant property available for development 45 BILL NO. 000344 in the 5th District, moreso than in some other districts. One of the major housing producers, homeless housing producers, Project HOME, has had the 5th District as a primary, although not exclusive, focus. And a significant number of homeless people and formerly homeless people are North Philadelphia residents. There has also been significant special needs housing production; however, in other districts, including the 2nd and 3rd District. Some of that is captured on the enclosed information. For example, Chart C shows 77 units in the 3rd District, and Chart B shows 67 units in the 3rd District, as well. There is no question that the 5th District has had the overwhelming volume of special needs housing funded under this program. But I think it is fair to say that there has been more of a geographic distribution of other program resources; such as, the Tenants Rental Assistance Corporation, housing vouchers, as well as programs funded through the Philadelphia Housing 46 BILL NO. 000344 Authority, such as the Section 8 program.
So that number lends itself more to the availability of developable parcels, vacant properties, more so than a decision on OHCD's behalf, and based on developers' responses to RFPs?
The cost associated with special needs, is it substantially more than normal, traditional housing?
I would say that it is not. A lot of the special needs housing development is costly, because in some instances facilities are built into the development, common areas and service facilities. In other instances, however, existing properties are purchased and moderate rehab is completed. In the 5th District, I would say that the cost of special needs housing are roughly comparable with other development, and sometimes that cost is substantial. 47 BILL NO. 000344
All right. I am trying to get a sense of the disparity in terms of total unit count, cost associated with that. It appears to be substantially higher in the 5th District, versus some other districts. And the only other category that I see that there is a wide disparity is the special needs. And I am trying to find out, the special needs housing category, is that attributed to the substantial disparity in the cost of total count?
I would have to provide some more information on that. And we could do that pretty readily. I believe, though, that the two issues may be the condition of the buildings, where buildings are rehabilitated, and, secondly, the addition of program and service facilities that is associated with special needs.
So there is a real possibility that that disparity in the number of dollars spent in the 5th versus other districts has more to do with -- I should say, have not as much to do with the strategies or the policies associated with the Office of Housing, but it has 48 BILL NO. 000344 more to do with the responses by the developers and the types of facilities that are being built; i.e., special needs?
I believe so. And we will provide you with the detail that I think will bear that out.
The Chair notes that Councilman Kenney, as well as Councilman DiCicco, members of this committee, are also here. Councilman Ortiz and Councilman Clarke who just spoke are likewise here. And now we recognize Councilman Ortiz for questions.
Thank you, Madam Chair. Mr. Kromer, you and I spoke not too long ago, and I asked for some charts from you in terms of -- because we talk about contracts. But a lot of CDBG money is producing a lot of housing, and those are jobs. Generally in this city, and in this Council, we have had a tradition of really, 49 BILL NO. 000344 especially when the school system comes in, that we ask for people's residency, where do you live, if you are earning money that is earned by city dollars, whether they come through the federal government or city taxpayers. And we have been very staunch defenders, this Council over the last years have 9 been very staunch defenders, of residency 10 requirements for people who work with the city and 11 get paid through city dollars. 12 And I was looking through, and I have 13 only two. And I asked for a further analysis and I 14 asked for -- because I like to look at it in terms 15 of the last five years. I have February of 2000 and March of 2000. And I imagine that these are housing projects, building projects, that are currently being built.
These are not projections; this is currently being built. And, it strikes you. It strikes you because you have a line on it that says percentage of workers, Philadelphia workers, on entire 50 BILL NO. 000344 projects. And on the total of all the projects, it comes out to 48 percent of the workers in these projects are Philadelphia residents. Now, that begs the other question. Of that 48 percent, I would like to know, if you can provide it, the ethnic makeup by gender of that 48 percent, female, Latino, African-American. I also would like to find out, of that 48 percent, the skill trade. So that I want to make sure that the 48 percent of Philadelphia workers -- and I have nothing, you know, not a problem. But I would like to find out how many of them are carpenters, how many of them are electricians, and down the line. And I would imagine that the other 52 percent is nonPhiladelphia workers. I would like to find out, of that 52 percent, how many of them are Pennsylvania residents. Because, after all, this is all taxpayers' money. And if we demand that our teachers be Philadelphia residents because we pay them with taxpayers' money, I believe if we spend some of this money, we should have a greater percentage, other 51 BILL NO. 000344 than that. And then I would like to find out, on all of these single projects that you have here, how many African-American contractors, how many Latino contractors, how many women contractors are either the main developer or main contractor in the projects that are just here in March and February of 2000. There is a project here in the Latino community that the percentage of workers is 62 percent that are nonPhiladelphians. That's unacceptable. There is one here in the African-American community where the percentage of workers is 92 percent are nonPhiladelphians. That should be unacceptable at this point in time. So if you can get to me contractors, subcontractors, whether they are Philadelphia contractors or nonPhiladelphia contractors, I would really like to find out. Because we have done a lot of -- I have spent a lot of time sitting here over the last 15 years approving CDBG budgets and seeing the lack of participation and the nonparticipation of 52 BILL NO. 000344 African-Americans, of Latinos in all of these expenditures that we have had, from 1984 to today. That's a lot of money and a lot of jobs and a lot of contracts. Give me a reason. Can you explain to me, you know -- I know that we have been talking in this Council and in this city of employing community folks, employing Philadelphia residents. And every time I go out there in the community, I know that there are carpenters and that there are electricians and that there are bricklayers, not just laborers. How come we can't get them employed on these projects that are funded by taxpayers' money.
I would like to respond to that question, but first ask Kevin Brooks to address the data issues that you had raised previously, and then I will explain.
Good morning. My name is Kevin Brooks, and I am Assistant Director for Equal Opportunity Employment and Training in the Office of Housing and Community Development. Councilman Ortiz, we can provide that breakout in demographics on housing projects as you 53 BILL NO. 000344 requested fairly quickly, seven days.
Very good. I would like that. And with the contracts, too; right?
Yes. We will give you the information, the demographics of who's working --
If Joe Rodriguez has a contract where there is 10,000 or 2 million dollars. I don't imagine Joe Rodriguez has a $2 million contract, but I would like to find out what he does have.
Yes, we can. It will show the dollar amounts of the contracts, the demographics of the workers, where they are from, local, nonlocal, race, and sex.
With regard to the issue of why these figures are so poor, there is a broader issue that needs to be addressed. And I summarized that issue in the material circulated last week to 54 BILL NO. 000344 Council Members. Increasingly during the past few years, building trades have been pressing developers and builders of Community-Development-Block-Grant-funded projects to enter into agreements with contractors and subcontractors that are aligned with the building trades or have the agreements with the building trades. In the Cecil B. Moore Home Ownership Zone, for example, a venture that does not require prevailing wage payments under Davis Bacon, there was a substantial amount of building trades pressure on the developer not to engage the services of women-owned, Philadelphia-based business because that business did not have an agreement with the building trades. Again, I want to make is clear that I am not here to blame the building trades for what has been an unacceptable level of performance on the city's part. But it does happen that the building trades members who happen to be participating in the Community-Development-Block-Grant-funded activities, 55 BILL NO. 000344 both downtown and in the neighborhoods, do not have the level of representation of Philadelphia residents that I believe we would all like to see. Now, it may be that some of those Philadelphia residents are working on jobs in the suburbs, as I have been told by some representatives of building trades. And I certainly can acknowledge that some of the trades have made substantial progress in developing apprenticeship programs and recruitment for Philadelphia residents. But that really doesn't address the concern you raised. The goals are not being achieved. We have got to do a better job. And I believe that the only way that we can achieve better performance is through some kind of collaborative agreement and demonstration.
Do you know what is frustrating, Mr. Kromer? I saw Ed Schwartz just come in. And what's frustrating is that even before, when Gallery and when Steve Levy was at OHCD, directors of OHCD have been saying that ever since that time. 56 BILL NO. 000344 And I know, you know -- and what I would like to see, is actually a chart that says -- because a lot of money, a lot of hotels, a lot of CDBG money has gone down since 1984, billions of dollars I would say. And most of the participation of minorities in this city, although the population has either risen, has either remained the same or gone up insignificant percentages, in over 15, years. 11 And what we continuously ask is, why 12 is it that we are not insisting that it is 13 taxpayers' money, that residents and people of the 14 areas get the first dibs at that, and that we help, 15 that the contractors have -- because I remember 16 somebody sitting there telling me at one point, "Councilman, do you know what it is? It is that we don't have enough African-American contractors, and we don't have enough Latino contractors, and that we don't have enough women contractors." Well, now we have Latino contractors, we have an association of African-American contractors, we have women contractors. Now the reason of why they're not being hired changes, why they are not participating 57 BILL NO. 000344 at the level that they should be participating in. And it seems like we are passively accepting that the use of taxpayers' money be used in this city in a way that really discriminates -- although we don't like to use those words nowadays, you know -- discriminates and puts into an unfavorable position minority contractors. And then when we have the jobs, and somebody else gets the job, and they are from the outside, and they are not minority contractors, we passively accept the situations that most of the people that are working in those projects in Puerto Rican, black neighborhoods are not Puerto Rican, are not black, and are not from this city. And we just passively accept it continuously. And, for the life of me -- because we keep on coming back, that we have a population that is underemployed, and it isn't for the lack of money being spent in neighborhoods. And we've got to do better. And I don't know if you are going to be there in this Administration, but you know, we have got to change the tune, we have to change the words to the music. 58 BILL NO. 000344 Another question. Over here in this chart that we have, the criteria, in terms of percentage of CDBG money spent, is CDBG money spent on a need basis, that poorer districts get monies?
No? Is it spent on the basis of how many low- and moderate-income people you have? So that if you have a higher percentage of low- and moderate-people, you have a higher percentage of CDBG money being spent?
No. Most of the funding is made available through one of two activities: The first activity is the Requests for Proposals process that I described in my response to Councilman Clarke, in which the Redevelopment Authority, on the city's behalf, invites developers to come in and apply for funding for housing production activities. The other approach for awarding funding is a citywide approach, in which programs such as the PHIL Loan Program, the Basic Systems Repair Program, Housing Counseling and Settlement Assistance are available to any income-eligible 59 BILL NO. 000344 person anywhere in this city. And any individual may apply for and receive assistance through those programs.
According to that criteria, the 7th Councilmanic District, which is the second highest district with the biggest poverty population, you are saying to me that you've got the second lowest, or seven other districts have more bids for contracts than that district?
There are like six districts that have a greater percentage of CDBG money being spent, actually more than that. Six districts. So the conclusion that is to be drawn is that six districts put in more bids for proposal and were awarded those contracts.
That's right. I think it is also a reflection of 60 BILL NO. 000344 the likelihood that -- you know, I would like to double check on this -- that at the time the most activity community development corporations, Norris Square, Nueva Esperanza, probably were implementing housing ventures for which they previously received funding. Those two organizations in particular have received as much funding as they could use in every year of the program. And the zero during this year of this program tells me that they probably had funding that they were using at the time and didn't require a new commitment. In addition, you will see that there is substantial participation on the Preservation Program side. For example, this district accounted for about percent of all settlement grants 19 awarded during the year. So it is a combination of 20 activities. 21
Again, if I can just 24 respond to your earlier comments. 25 There is no question that the 61 BILL NO. 000344 situation that you described is unacceptable. The city has not achieved the goals that it had set. One small point of information, up until 1993 or '94, this city wasn't even accurately measuring minority worker, Philadelphia worker, business participation in the program. There was no 8 accurate measurement of that. And in part thanks to Kevin Brooks and the development of computerized recordkeeping, we now have that. And I think it is fair to say that at that point some of the participation levels went up, and that the participation levels went up again after the issuance of the 1995 neighborhood benefit strategy. However, as you and others have pointed out, we are not where we need to be. I would just say a collaborative approach involving the city Administration and unions is really essential. A collaboration has been achieved between the unions and the Philadelphia Housing Authority, which was make possible by the fact that PHA has a need for maintenance workers and has an ongoing renovation program. 62 BILL NO. 000344 We don't have that in the Community Development Block Grant, so we have to fashion another approach. But I believe PHA shows that it can be done and that all the parties are willing to get involved. Now we have got to do that to achieve a better performance than what you have described.
Thank you very much. Councilman Nutter has additional questions.
Thank you, Madam Chair. Mr. Kromer, I would like to get to the heart of some of the discussion that we have had, both in previous years and some has been in private. First let me say, though, that my colleague, Councilman Clarke, he and I have had some discussions over time, and we had some just here this morning. Let me first and foremost say that any discussion about funding of various programs and what neighborhoods or communities or even Council districts have received funding or not received 63 BILL NO. 000344 funding, one, I believe, is an appropriate discussion as we try to contemplate what we're going to do with either $79 million in CDBG funds or upwards of $100 million throughout the entire program. But let me also say, neither Councilman Clarke, nor any other member of City Council, especially District Council Members, has to feel in any way, shape, or form defensive about -- and I am not saying that the Councilman was or is, but I am saying for myself -- I think that members should be rather pleased and proud about what they either have been able to do or what the benefit has been in their particular neighborhoods. This is a different discussion. This is a discussion about what we're going to do going forward and how we share more of these resources with people who are eligible under either HUD guidelines or the city guidelines. And we can go back to the discussion about the city guidelines, and I have some documents about that. Speaking for myself, and I know a couple of other Council Members are in this 64 BILL NO. 000344 particular position, no one begrudges what others have been able to get. The question is, how do you get needed resources for your own district, while at the same time not hurting someone else. So there has to be a discussion about realignment of resources and the recognition that different neighborhoods have different needs. And just because someone is eligible under the guidelines in one neighborhood and gets the benefit doesn't mean that someone who is eligible under the guidelines in another neighborhood shouldn't get the benefit. They may not necessarily need the same access to programs. They also may not need the same level of funding support. But there are neighborhoods in this city that will not and do not necessarily need the level of housing production activity, whether on the rental side or the home ownership side, in PHIL housing or new construction, it doesn't mean that those neighborhoods have no needs or have inconsequential needs; it means they have different needs. And if they are eligible, then they 65 BILL NO. 000344 have a right to access these programs as much as anyone else has a right to access the programs, not to penalize people who happen to be low and moderate income or poor and penalize them based on where they live or that they somehow are now not in a property situation because they happen to live under anyone's estimation or determination in a somewhat better neighborhood. But because they don't need 40 new houses on the block, that somehow the stable houses on the street don't need some additional support that we can probably provide. So that's the kind of discussion that I would like to have. It is certainly not personal. It is about how we are going to allocate these dollars based on the facts of past use and what we're going to do going forward. Let me finally say, Mr. Kromer, the package that you have, or the chart that you have, as we were sitting here, I did find one error on one line. It is on Chart K, there is a new revised Chart K coming around. The error is -- it is actually in -- one of the reasons I found it, because when the 66 BILL NO. 000344 Councilman raised a special needs housing area. On the chart that was handed out earlier, in the special needs housing area, the average dollars spent per unit for the 5th District was $22,088, although the percentage of the program dollars on the chart was listed as zero. 3 percent.
The new chart has been corrected to reflect that. I apologize for the error. Mr. Kromer, what I would like to talk about is, starting with Chart E, which is a compilation of all of the programs and all of the units and all of the dollars from Years 21, 22, 23, and 24. Those are the years your office was able to provide documentation on last year. And, naturally, we are in Year 25, and we wouldn't be able to talk for obvious purposes about Year 26. So these are figures provided by your office and represent the most recent compilation of numbers. Have you had any opportunity, since we said this to you, to take a look at some of these charts? 67 BILL NO. 000344
From our calculation based on your figures, the total number of units that have been produced, if you will, over the -- I believe there are programs listed, 7 neighborhood-based rental, neighborhood-based home 8 ownership, special needs housing, Home Start, HRP, 9 MEND II, settlement grants, heater hotline, VSRP 10 Tiers I and II, VSRP Tier III, weatherization, and 11 PHIL loans, represents 49,608 total units. Total 12 amount of money expended, $177,553,866. Do you have any reason to believe that that is not accurate?
Okay. And the result of that is the various units that have been produced and the dollars that have been spent as we have broken them out by Council district. Now, one of the things we looked at was not only how the dollars were spent and where they were spent, but the information received from the City Planning Commission indicating where people who are considered low and moderate income by the 68 BILL NO. 000344 federal government, where they live by Council district. Have you had a chance to look at that particular column?
Does it surprise you at all that the distribution of low and moderate income people throughout the city is, with a couple of minor exceptions, fairly even across the city?
Okay. So going by Council district, it apparently, for your purposes, does not come as a surprise that 11.6 percent of the low- and moderate-income people in the city live in the 1st District, 10.4 percent live in the 2nd, 11 percent live in the 3rd, 10.2 percent live in the 4th, 10.7 percent live in the 5th, 8.8 percent live in the 6th, 11.2 percent live in the 7th, 10.1 percent live in the 8th, 8.6 percent live in the 9th, and 7.4 percent live in the 10th; is that --
Well, I would say to you that I actually was somewhat surprised at those numbers because I think, based on what we're generally told or what we read, you would have the indication that there was a higher concentration of low- and moderate-income people in certain neighborhoods as compared to some other neighborhoods. And it is certainly somewhat clear from the spending side that -- and I think, again, based on need and availability and response, if we're in an RFP process, you know, people go, I guess, where the opportunity is. And it certainly costs more to build a new house than it will ever cost to repair an existing one through VSRP, or put in a new heater, or any of those kinds of projects. Can you give us some sense, though, based on how the dollars were spent through the Council districts, as compared to where people who are low- and moderate-income live, what your reaction is to that?
Well, the income criterion, as I indicated, is not the only one on 70 BILL NO. 000344 which the federal formula is based. And the city's program has reflected those additional factors; such as, housing vacancy and the condition of existing occupied housing. The areas that show the highest levels of expenditure of Community Development Block Grant funding are not only areas of low- and moderate-income residency, but also areas of high housing vacancy and the areas where most or all of the housing stock is old, "old" meaning 50 years or more old. And what that adds up to is a combination of opportunity to develop housing, social need on those housing needs and other special-needs-type issues, and the need to repair the existing housing stock so that the older housing in many Philadelphia neighborhoods can be preserved.
Well, what is the policy in the other areas of the city? And what is the goal in other areas that either don't have significant vacant land or high housing vacancies?
There really has been no 25 plan to apportion the Community Development Block 71 BILL NO. 000344 Grant funds by area of the city. Again, the basic approaches that have been used in past years have been the RFPs for housing production, and then the citywide availability for the other programs. That, I understand, really doesn't address the needs of some areas of the city that, as you indicated, don't have a wealth of housing production opportunities, and may have community development needs other than those that are represented in this program chart. One issue that we've discussed is the issue of neighborhood infrastructure; for example, curb and sidewalk reconstruction. I agree with you, that's an issue we've got to address if we're talking during the coming years about blight removal and neighborhood stabilization. And it is an issue that I have struggled with because I have been opposed to the use of block grant funding for this purpose. Following discussion with you, and after doing some more homework on a very successful program known as Model Blocks, I have proposed to 72 BILL NO. 000344 the Mayor and will followup with exploring an opportunity to establish a citywide Model Blocks Program in which curb and sidewalk reconstruction would be combined with facade improvements and other home repairs on blocks where, as in the current Model Blocks Program, there was a high level of property-owner commitment to improvement. The curb and sidewalk improvement reconstruction, I believe, under this approach would meet the test that has been established by the Law Department and enforced by the City Controller. So that I believe with that --
But the policy you are talking about has nothing to do with the CDBG program.
We are not in a Capital Budget discussion. We passed the Capital Budget.
However, if this were 73 BILL NO. 000344 successful, then that Capital Program piece would become an element of the overall consolidated plan, just as funding from the state government is part of the current consolidated plan. So my intention is to try to organize such a program for inclusion in the Capital Program for which the planning begins later this summer and in the early fall.
Well, I understand that. But you don't need Capital Program dollars to do what is already eligible under the HUD guidelines for any of the things that you just mentioned. I mean, it would be nice to have some additional capital dollars. And we can have go have that fight either with the Controller or with the Law Department or anyone else. But, I mean, for your testimony today, aren't all those infrastructure improvements eligible under the CDBG guidelines as they presently exist?
They are. But, again, we get to the question of 74 BILL NO. 000344 how they would be funded, given the fact that we have a very strong program, with a lot of activity. And that introducing a new element in the program, that is, funding curbs and sidewalks through the block grant, would require defunding or cutting back on some existing programs.
Again, I am not going to reduce this to a curb and sidewalk discussion. I mean, there are a wide variety of needs in many neighborhoods that either have to do with streetscape issues or other eligibility items, as already listed under the CFR. So, I mean, which is why I asked you, I think my first question was, how would you break this budget out as it relates to all of the eligibility items under, you know, I think it's 500.205. This is not simply a curb and sidewalk discussion. And, secondly, again, I would take the position, it has nothing to do with what goes on over in the Capital Program side of the house. We can have that discussion with those folks separately. 75 BILL NO. 000344 Again, if, you know, we were not in the position that we had to take $13 million off the top of the program, or $29 million off the top of the program, we would have additional funding to do a wide variety of things. This has been a program, and a philosophical decision and a policy decision, that has nothing to do with whether we are able to do certain things or not. It has just been the policy for some time. I think that that component of the policy needs to change. It is not responsive to the needs of many other people across this city, and they are not getting the benefit for which they deserve.
I understand. And I am simply proposing an approach which I believe would enhance that policy and bring in the opportunity to use new resources for some of the activities that you have indicated are a concern.
But that doesn't have anything to do with Year 26. I mean, we are only, some of us will be fortunate to live into the future. The question is, what are we doing today 76 BILL NO. 000344 about this particular program. This is not a new issue. Again, both publicly and privately I have talked about it at the hearing back in April. You and I have had this discussion on numerous occasions. And, quite honestly, there has been no movement and no response, even now with all of the facts. The question is what are you prepared to do about it now?
Well, I believe that this could very much be an activity for Year 26. To really mobilize an effective conservation program of that type we would need not only the Capital Program support, but we would need to bring in the network of community development corporations and some of their funding sources, as well, and getting that --
Let's talk about that. Because you have made reference on a couple of occasions to either CDCs or CBOs. And, I mean, is it your either testimony or policy that it is primarily only the neighborhoods that have either an active and 77 BILL NO. 000344 full-capacity CDC or very active or agitated CBO that will get funding, regardless of eligibility or need?
No. And as I have indicated in the past, there are opportunities which have been used in many neighborhoods for civic groups or other neighborhood interests to partner with private developers to get community development work done in neighborhoods that are not represented by Community Development Corporations.
Primarily new construction and vacant house rehabilitation activities.
I don't necessarily need any new construction in most places. So what else do you have for me?
Yes. But I think the 4th District has a number of good examples of partnerships between local organizations and private developers. The Brooks School venture, for example, was a very effective collaboration and 78 BILL NO. 000344 produced some real benefit.
Right. I mean, that's one. And we can talk about Appletree Street and we can talk about a couple of other streets. It nowhere near meets the needs or demands, at a much lower cost, as compared to some of the other activities that are in the program. I mean, you just cannot compare, you know, housing rehabilitation or housing investment at 50 to upwards of 100 thousand dollars plus for one house, as compared to what you could do on a couple of blocks to completely revitalize the neighborhood. Now, I think the person that gets the new house, that's great for them. But I think the people who live on a couple of blocks, where they see complete revitalization activity, that's great for the entire neighborhood. And the question is, how can we nourish those two together and make sure that we can fund people in their houses, whether on the rental side or the home ownership side, and at the same time maintain stability in the neighborhoods that are starting to experience problems themselves, with 79 BILL NO. 000344 these funds for which they are eligible. I'm not asking you to do anything illegal.
Well, with regard to the question of CDCs, which you raised initially. For any of the activities that are undertaken by CDCs, there is no barrier to a church congregation or a civic group allying itself with a private developer to complete any of those activities. There is no set aside for CDCs and nothing that is done exclusively by CDCs.
Suppose there is no developer out there for them to partner with; what do they do then?
Well, I am not aware of any scarcity of prospective developer partners. Between the private developers that have worked a program, or the citywide nonprofit groups, such as Community Ventures and Friends Rehab Program, I don't know of any group that has been unsuccessful in attracting interest from private developers.
Is it your reaction or response that the allegations over the past four years -- and I don't know what the 80 BILL NO. 000344 previous four years were like, because there were no 3 documents provided for those years -- do you think that they have, in an overall fashion, well served the city, or has it given you any thought that we need to reevaluate how we spend these dollars and how we make the most impact and the need for different responses to different communities?