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?
On the one hand I am very pleased with what these charts show. Nearly 50,000 units of housing production and conservation; a substantial portfolio of different activities, some of which lead the nation in terms of performance and value; and a reasonable, in my opinion, a reasonable distribution among geographic areas of this city. There is no question that the production and the performance and the value could be increased further. And there is also no question that the geographic distribution of the resources could be made more effective. The area --
-- that I think -- I'm getting to that -- requires most attention is the one that we have discussed for many years, and that is neighborhood conservation and preservation. And although it could be argued that a number of these programs do support that goal, the home repair programs, for example, I think we would all agree that that is not sufficient. For the immediate future, I propose that we look at a very successful model that has been effective around the city, the Model Blocks Program, and attempt to fashion a program of that type that would draw on some outside resources and bring them in as part of the program, although they are not community development resources, so that we could build up that activity.
Well, I mean, I believe in accessing as many outside resources as possible. The question is, what are we going to put in that resource pile to help support that?
In this budget, there is no proposal for funding a new program.
I am not talking about a new program. We are talking about an 82 BILL NO. 000344 expansion of an existing program. Isn't that your suggestion? Aren't you suggesting that we expand the Model Blocks Program in response to the issues that I have been raising?
What I am proposing, really, is new in the sense of curb and sidewalk reconstruction, rather than sidewalk patching and repair would be included. It is, in my mind, substantially different. Also, the citywide emphasis that I am proposing is substantially different, in my opinion. But in terms of what's represented on this chart, the proposed consolidated plan for the coming fiscal year does not propose any substantial variation from the portfolio programs that is represented here.
Let me just mention -- and then I know a couple of my colleagues have questions, and they have been very generous -- as I indicated earlier, 10.2 percent of the low- and moderate-income people in the city live in the district that I represent. 83 BILL NO. 000344 And over the last four years, based on the figures that you provided, the funding level across all the programs was 7.5 percent of the dollars. That represents $13,342,894. If the district was just funded at the comparable rate of the low- and moderate-income population, the figure would be $18,110,494, which is a shortfall of $4,767,600, just based on this is who you have, funding should be proportionate to what you have, everybody is treated fairly across the board. And, in some instances -- and that's actually one of the smaller shortfalls, if you will, as compared to some of my colleagues. So, I mean, I think that this is a very serious issue, and some action needs to be taken for Year in order to get some resolution to 19 these particular issues. 20
However, if we applied 21 the other criteria that HUD uses in determining how 22 much funding goes to Philadelphia, that is, the 23 vacancy criteria and the housing conditions 24 criteria, we might find that the 4th District in 25 fact receives more than its proportion of the block 84 BILL NO. 000344 grant funding. We would be glad to pursue that analysis. I don't know what the results would be. But I just don't know whether they would show that the 4th District is receiving less or more or about the right amount of the apportioning of the block grant funding.
Well, then lastly, what would you suggest is the response to a low- and moderate-income persons in the district who meets the income eligibility criteria, just like anyone else across the city, but they see no 14 activity in their particular neighborhood or their access to programs? What would your response be to that person?
Well, I think there are two responses. One is that most of these programs are accessible to any income-eligible person in the city. And then, secondly, I think this year in particular, the first year of an Administration, is a good time to get organized and plan for some new activities, rather than simply defending a 85 BILL NO. 000344 repetition of program activities which had been satisfactory, but do not address all of the citywide needs. So I would propose that, as in the Model Blocks variation that I have described, we talk about what those new approaches should be, consider this budget a transition budget, but not wait to get involved in discussion of Capital Program, which, again, will come up late this summer and early this fall, so that we begin mobilizing for some of the new program activities that these residents would have in mind.
Thank you very much. Councilman Kenney, unless yours, Councilman Clarke, is a followup question.
This is kind a followup to what Michael was talking about. I just, as an At-Large Member, we don't always pay attention to the specific allocations given district by district because we have citywide interests. But within recent months, Michael, 86 BILL NO. 000344 Councilman Nutter, has kind of given us this information. And it really is -- there seems to be a glaring inequity. I don't understand the reason why the concept of allocating available dollars across the board, where the low- and moderate-income percentages across the city seem to be relatively equal, distributing those dollars in an equal and fair fashion. It seems that through your testimony and through your pleasant insistence on your philosophy, that your office is simply the Office of Housing. And if your office was simply the Office of Housing, I could buy your argument a little better. But since it is the Office of Housing and Community Development, I would suspect that we're talking about the continuing development and stabilization of every neighborhood across the city. And then if you would argue to me, well, you know most of the poor people live in District A or District B or District C, then I could say, you know, well, maybe it is fair because the 87 BILL NO. 000344 level of poverty is so much greater in those particular districts that it makes sense to kind of allocate more of the money for those districts. But I look at these percentages and see that it is basically evenly distributed throughout the city where poor people live. To me, it is not only nonsensical, it is kind of unfair, for the rest of the city to get a lot less than some other areas of the city are getting. And I think a poor person living in District A is as poor as a person living in District E, not wanting to designate districts by number, because I know people may get offended. But just talking about the basic fairness of how this money is allocated. And in some ways the discussions we have had about, you know, investment in middle-income and upper-income housing kind of folds into this, too. Because, again, as Councilman Nutter says, if we are stabilizing neighborhoods that are now doing well, and making sure they don't fall into disrepair through the use of this money, what's so 88 BILL NO. 000344 wrong about that?
To respond in reverse order, the proposed consolidated plan for the coming fiscal year does not include any provision for supporting middle- and upper-income housing. Because the only funding source that's represented here is the Community Development Block Grant, HOME, and the other programs that are income restricted. I believe that discussion would need to be part of the Operating Budget discussion, because other funding sources would have to be brought in to play.
I mentioned the middle- and upper-middle income housing just as an aside. My basic concern is the line of questioning that Councilman Nutter began. And that is, percentages of low- and moderate-income people is clearly evening spread across the city. What is the problem with the philosophy or the practicality of distributing those available dollars evenly across the city, as the poor people are distributed equally across the city? 89 BILL NO. 000344
Housing Director and Community -- you are the head of the Office of Housing and Community Development.
Okay. So that's why I said it is simply not the Office of Housing.
I have had two concerns as head of the Office of Housing and Community Development. One is a concern about open access to the program, so that any individual or household that meets the eligibility requirements can get access to the program and can get served through them. As I have indicated, most of these programs are open access programs, available to any eligible person. The second concern that I have had is that the funds that we use are used strategically, 90 BILL NO. 000344 that we pay for performance. So the groups that are delivering get access to the funding, get their proposals ranked highest, and we see some real production. The part of the inequity that results, that relates to the 5th District, involves, as I have said to Councilman Clarke, the special needs housing because of certain circumstances. Another reason for the imbalance is that, in the 5th District, we have had two big leveraging opportunities, the Nehemiah Program, which supported the development of West Poplar, and the Home Ownership Zone Program in the Cecil B. Moore area. So a substantial commitment of block grant funding was made to address those opportunities. Just to repeat quickly what I had said to Councilman Nutter, low- and moderate-income residency is not the only criteria that HUD uses in giving us the award. And I will provide Council Members with an analysis that shows how the other HUD criteria, vacancy and housing conditions, for 91 BILL NO. 000344 example, would apply and what distribution would be shown. I am concerned that a strict application of the percentages, whatever this analysis shows, might not be in our best interest. For example, if we decided to apply these percentages across the board, would we say that every Council district had to establish a fair share proportion of homeless and special needs housing? I don't really believe that that kind of requirement should be imposed.
But part of the premise of your answer is that all of this money needs to go to some form of housing.
But according to the HUD guidelines, there are other uses that are eligible for this money, besides housing. And if -- I guess the argument could be made that if a relatively stable neighborhood received a greater share of these funds to improve the community that they are living in, those people are living in, would it not inure to the benefit of 92 BILL NO. 000344 the city as a whole, because perhaps those people would be staying in that neighborhood, as opposed to moving out of that neighborhood, and potentially precipitating a decline in what is now a stable neighborhood?
And those people are paying taxes and contributing to programs for homeless and people with special needs and other types of programs. But I don't think we are seeing the forest through the trees here. And I believe that we can't wait another year to do this. I think that we ought to start talking about this now. And I think that's the purpose of having this hearing and this deliberation. Because you have created, and admirably so, almost 50,000 houses throughout the city. Maybe it is time that we started focusing on other areas of neighborhood improvement, in addition to housing rehabilitation and construction. But now looking at other areas to 93 BILL NO. 000344 stabilize the community, like curbs and sidewalks, like shopping district improvements. I mean, maybe there is creation of employment in additional housing amongst -- within shopping districts that have been falling into decline, which creates not only the benefit of additional housing, but additional jobs and taxes. I mean, I think the focus has been solely on housing. I mean, people need more than just a house. They need a viable, stable, producing community in order to prosper. And I think that it has been a big mistake over the past probably eight years.
I agree, we have got to demote more attention to those issues. Two comments on what you said. One, after housing, and really moreso than housing, I think the issue for neighborhoods is jobs and job readiness. And that's why in this budget, as in prior years, we are proposing to fund job-readiness programs and jobs programs that work, that address a niche that the existing work force programs are not developing. 94 BILL NO. 000344 We have, I believe, the most successful YouthBuild program in the country. And I believe representatives of YouthBuild are here to testify. But we are funding activities that help people in the neighborhoods connect with good-paying jobs -- not community service, but good-paying jobs -- in the metropolitan economy. And, to me, that's a critical activity. We are proposing that again. Secondly, the other major division of the program has been the economic development division. And there are representatives of those agencies that could describe how the funding for economic development is being used.
I just want to lend my voice to the chorus of people that I think you are going to hear from today from Council that want to do something in Year and not wait until 21 we do this proposed blight initiative and Year 27. 22
Thank you very much. 25 Councilman DiCicco. 95 BILL NO. 000344 COUNCILMAN DiCICCO: Thank you very much. Mr. Kromer, good morning. On the same line of questioning as Councilman Nutter and Councilman Kenney, one of the biggest complaints that my office receives, and I suspect that the other District Councilpersons receive also, is when the city, the Water Department, the Gas Works, whatever, decide that it is time to do some infrastructure reconstruction of city streets. Sometimes decisions are made that, you know, after the reconstruction, a new curb may go in, or maybe the replacement of one of the blocks or two of the blocks that were disturbed, or sometimes you do the first block in and then leave the second or third block to the homeowner as to whether or not they want to make a complete reconstruction of the pavement. While that may not seem as serious in the scheme of things we are talking about today, I was just wondering, what role does your office play, if any, in coordinating the efforts between the street reconstruction and that portion of the curb and sidewalk that is budgeted for repair or 96 BILL NO. 000344 reconstruction? Do you partner with the other agencies, the Water Department, the Gas Works? Could you enlighten me a little bit on that? Because I think on some of the materials I have read, they may have even been on your book, but in some of the books I have read, when we talk about neighborhood revitalization and stabilization, it is amazing how important new sidewalks and curbs are. It really sends a message of hope in a community that something is changing and something is changing for the better. And I was just wondering if that's a question of policy. How do we get to that? Are you doing anything in coordination and cooperation with the other agencies?
We currently aren't doing anything in coordination with other agencies that are responsible for curbs and sidewalks and water and sewer improvements, in part because our work, housing rehabilitation and settlement grants and home repair, doesn't get in the way of the work of those agencies. 97 BILL NO. 000344 However, I think it is fair to say that this situation will not continue, and that going forward we will see a lot more coordination between infrastructure replacement that is part of the Capital Program and associated housing improvements. That's the message I am getting from the Mayor's staff, and I believe that is much more so the orientation of the City Planning Commission than it had been in the past. So I think in the coming months of this coming Fiscal Year, we will see a lot more of that kind of work. COUNCILMAN DiCICCO: I certainly think so. Not only because it would reduce the number of complaints that our office gets, but I also think that it will lend itself to neighborhood stabilization. And you know what happens when the 1000 block of Cantrell gets a complete sidewalk, but the 900 block only gets the first block of the sidewalk, people feel left out of the process. And aesthetically it just doesn't make sense, either. You don't see that new 98 BILL NO. 000344 construction and that sense of there is something changing for the better. And I would think that it would be a lot less expensive, while the contractors are out there doing the excavation and tearing up the sidewalks, and that portion of the sidewalk, just to go in another block. I mean, there are a couple of cases where in South Philadelphia, I know on the 2400 block I think or 2900 block of South 9th Street, as an example, the neighbors wanted a complete sidewalk. And we were able to make an arrangement to get some additional city money in. But the residents, the homeowners, had to contribute a certain amount of money towards the second block, which would have completed their sidewalk. And they were happy with it, but they weren't totally happy because the residents a block away got a complete sidewalk at no cost. And, again, I think it really does change the whole environment. The aesthetics of it just really make it. For the enhancements that come with it, I think you couldn't put a value on that. 99 BILL NO. 000344 I think it does really work for stabilization.
And the cost to the city is not significant. COUNCILMAN DiCICCO: Much less. Much less. Thank you. Thank you, Madam Chair.
Thank you, Councilman. Councilman Clarke and then Councilman Goode.
Thank you, Madam Chair. I will be brief. I just wanted to respond to some earlier statements that were made by a couple of my colleagues with regard to my questioning. I just wanted to say, I agree that this is the forum for all questioning related to the $79 million. It is fair game. But I would also like to say that I did not ask those questions in a defensive posture. So I didn't want anybody to feel that that was the case. The only one that I feel like I need to defend are some of the people who live in some of the parts of my district that are extremely 100 BILL NO. 000344 blighted. That's where the defense needs to happen. So I wanted to clear that. The purposes of my questions had more to do with points of information. I asked the specific questions about the disparity of dollars associated with the 5th District and the disparity associated with the special needs solely. That was the basis for that. With respect to these Council district allocations, I don't think that it is accurate as it relates to neighborhoods as an example. Both Councilman DiCicco and myself both represent neighborhoods that have probably the highest incomes in the City of Philadelphia and some of the lowest. Because we both represent Center City and North Philadelphia. So I don't think that's an accurate depiction in terms of neighborhoods versus Council districts. So I just wanted to make that point of clarification. And I also wanted to say that I am going to be as aggressive as possible to make sure that I can get more money into the 5th 101 BILL NO. 000344 Councilmanic District. Thank you very much.
Thank you, Madam Chair. I didn't know we were actually going to get into this discussion today this deeply. But I think there needs to be a new community development strategy within Year 26, actually as it relates to the Mayor's blight removal initiative, but I don't believe it should be one that pits low-income people against middle-income people. I do believe it has to go beyond political arguments. And I believe that the argument regarding equitable access, we need to make the record clear, as I think you said you will make it in terms of documents that you will eventually send to Council. But this city does not receive the Community Development Block Grant just based on low-income population. It receives it based on a number of different things that need to be clear; that people deserve that money, deserve access to opportunity, deserve access to developing their 102 BILL NO. 000344 neighborhoods for more than the population of low-income people that are there. There are other neighborhood conditions that are taken into account, including the conditions for investment. And the condition for an investment is not just a condition for public investment in terms of equitable access, but a condition for private investment. And there are places within this city that require more investment to improve their investment condition, to attract more private capital. The reason we put more money into low-income neighborhoods over the last 16, 20, actually years of Community Development Block 18 Grant Program, is because of private disinvestment. 19 And we have tried to change that. We have tried to 20 reverse that. 21 I don't think we have necessarily 22 done a good job of it; that's why we need a new 23 strategy. 24 But it should not be one that says 25 because private sector is not investing in 103 BILL NO. 000344 low-income communities in the way that they should, then we are going to give up on those communities and we are going to then move in just to secure middle-income communities. I want the record to reflect that, also.
Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam Chair. I would be remiss if I didn't thank you, Mr. Kromer, in your support of Jefferson Square, and there are a number of other projects that are going on in my district, and your office has been very helpful. And I again want to thank you for your cooperation. Thank you. Thank you, Madam Chair.
Thank you. I think, Mr. Kromer and my colleagues, that we have really gotten into the crux of, I guess, the philosophy of housing and community development. And certainly I have a housing consultant who is here and whose company has invested more than $40 million in my district. And housing is different than a lot of other things. You know, you have to really work 104 BILL NO. 000344 with the private industry, the institutions, try to deal with need, as well as stabilization. And certainly it falls into a different category than a lot of other fields. But certainly it is a tough job, and I think the 3rd should get everything. COUNCILMAN DiCICCO: Do you want a stadium? I can give you a stadium.
I wanted a stadium at 30th Street, the institutions didn't. Are there any other questions from members of the committee or my colleagues? Councilman Nutter.
Thank you. Thank you, Madam Chair. Mr. Kromer, can you share with us any information as it relates to either Year from a 19 funding standpoint or programmatic standpoint on 20 actions that are to be taken by OHCD with regard to 21 the acquisition/disposition process? 22
As with other 23 activities, there are no new acquisition/disposition 24 programs proposed in Year 26. 25 As I have indicated previously, the 105 BILL NO. 000344 proposed Year 26 plan does include a request for proposals that would be issued by the Redevelopment Authority on behalf of the city, inviting developers to request acquisition funding for --
I'm talking more about the actual systems involved in acquisition/disposition, and the speeding up of those systems. And, primarily, again, most of our discussion in this area is more about individuals trying to acquire properties through the city in this ongoing problem, is probably the nicest term I could use in the Public Hearing. When a person tries to get a property, we then oftentimes look at Act 94. Then you get a budget back for a property that is not worth that much, and we expect someone to give us at the end of the day or thousand dollars to 20 acquire a property that might be worth $5,000. And 21 no one in their right mind is going to do that. 22 Has anything been done to speed up 23 that process and cut down on some of the costs, as 24 well as the paperwork? 25
I can mention two 106 BILL NO. 000344 activities which, although not comprehensively documented in the plan, will, I believe, make a substantial improvement across the board throughout the city. One is the implementation of the new provisions of what has been known as the 1202-A program. This is a program that was initially enacted by Council during the 1980s, but recently was amended to include vacant lots, as well as vacant houses. And under 1202-A, as you may be aware, the Commissioner of Licenses & Inspections can authorize an individual or an organization to act as the city's agent in addressing code enforcement problems on a particular vacant lot.
I understand that. I am talking about the person who actually either wants to acquire the property or get the house next door either for themselves or to do rehab work or something like that, and it takes forever to get those properties. And because of the various administrative costs and other cost requirements, Board review, and staff costs at the RDA and a 107 BILL NO. 000344 number of other places, it is not viable for a person to pursue that. What I'm asking is, has anything been done from an administrative standpoint or a program standpoint to cut down on the dollars that are needed to acquire or the amount of time it takes to get that particular property?
Just one comment on 1202-A approach. I believe that would bring in a higher volume of vacant lots, and that those vacant lots would be conveyed through the sheriff's sale system in a pretty reliable way. In terms of the broader --
Just for the record, how long does sheriff's sale take?
I haven't studied the system in detail, but I believe that the system now delivers in approximately one year, which I think is reasonable for a vacant lot, side yard request.
The other initiative that's been tested by city housing agencies, that's 108 BILL NO. 000344 being considered for expansion, is an approach in which community organizations with the Office of Housing, the Redevelopment Authority, Department of Licenses & Inspections, would go through a particular targeted area and on the spot make the basic decisions about demolition, encapsulation, moderate rehab. And that those decisions would include funding the acquisition of vacant lots and vacant buildings for which interest has been expressed. This whole targeting and the planning that preceded the work in the field would involve the District Council office, as well as the community organizations in the area. And I would expect that that advance planning would include some decisionmaking about getting vacant properties to individuals and businesses that wanted them. How that would be funded is another issue. In the past, the Community Development Block Grant program has been the only funding source for acquisition and disposition. I can't tell you that there's a new funding source. 109 BILL NO. 000344 But I believe that if this program is adopted, and I think it is likely to be expanded during the summer months, then we would have to add to the resources.
What is an assisted acquisition and a nonassisted acquisition?
A nonassisted acquisition is an eminent domain acquisition, undertaken by the Redevelopment Authority, in which the cost of acquiring the property, the fair market value and the associated costs, are paid for by the developer of the property. And some groups such as Allegheny West Foundation have taken from their own budgets to pay for assisted takings of properties that they have wanted to develop. A nonassisted -- I'm sorry. An assisted -- what I described is a nonassisted taking, in which the developer pays the costs. An assisted taking is one in which a public funding source, primarily the Community Development Block Grant, is used to pay for the redevelopment costs of acquiring a particular property through eminent domain. 110 BILL NO. 000344 Those have been known in past situations in situations in which there is funding or an expectation of funding to actually produce the housing or improve the housing on the property to be acquired.
I don't have that figure here, but I can provide it to you by the end of the day.
Okay. If you could provide how many and the locations and the costs involved, I would appreciate that. What is the policy of OHCD, or what is not only your policy, but the philosophy and planned action, to deal with the anticipated or ongoing circumstance? We have an aging population here in Philadelphia in many of the neighborhoods throughout the city. And people are either, unfortunately, passing away or they end up moving into a retirement community, or maybe some senior housing, some of which produce or are assisted by the city. What is the game plan to deal with 111 BILL NO. 000344 this continued aging population and our ability or inability to attract new younger families to that housing in those neighborhoods throughout the city?
The two traditional programs that have been in effect for some time, that are intended to address that issue, are programs that improve the housing that older people are living in, or help sell those houses to new home buyers. And those programs are the Basic Systems Repair Program, many of the clients for which are elderly homeowner occupants, and the Settlement Grant Program, through which properties, a significant number of which are owned by older people or they are area inherited properties, are made available for home ownership. An additional newer activity is a vacancy prevention activity that has been planned in coordination with the University of Pennsylvania that relates to title problems. And I would just like Deborah McCullock to summarize that approach. MS. McCULLOCK: The vacancy prevention activities that we funded in the current year included a special training for housing 112 BILL NO. 000344 counselors and senior service providers, to help them assist seniors with specific housing problems. It also included a fund for what we call tangled title, to help people who can't transfer their properties to another buyer or who don't have clear title to their properties, making them eligible for loans and grants for repairs. Because of some encumbrance in the title, they live in the house, but it belonged to their parents and it was never transferred to them, so forth. So there is a specific fund set up to assist paying off whatever would need to be paid off and help people get clear title.
And what is this, a pilot project? MS. McCULLOCK: It is a pilot project. Last year it was funded, or Year 21 currently we committed $50,000 to it. And that's 22 again what is proposed for Year 26 to continue the 23 training counselors and continue providing 24 assistance to counselors and their clients on a 25 case-by-case basis to provide specific assistance. 113 BILL NO. 000344
And where is this offered? Is this a citywide program? MS. McCULLOCK: Yes. It is for the housing counselors that are under contract to OHCD, it is available to them, and to other senior providers. We have carried out the program in conjunction with the University of Pennsylvania and the Philadelphia Corporation for Aging. And so that both senior -- it's been a really good way for senior service providers, through the PCA network, to meet with housing counselors, through our Housing Counseling Network, and really share information and ideas about how each set of people can help the clients.
In addition, we are proposing funding for the Sharp Home Repair Program administered by the Philadelphia Corporation for the Aging.
If you could provide me guidelines from our earlier discussion, we talked about housing conditions, and see as it relates to final determination on funding levels for CDBG dollars, I would appreciate it. 114 BILL NO. 000344 Mr. Kromer, you came to a community meeting some time ago in a portion of my district, it was actually in North Philadelphia. And at the time you said to the people who were at the meeting that one of the reasons they didn't get funding in their particular section was that they were not organized, and that's why they don't get any money in that neighborhood. What exactly does that mean, and how does someone overcome that situation, and what do people have to do, in your estimation, to benefit from the programs of OHCD?
I think that it is essential, the residents who are interested in seeing improvements in their community get together and work together with city agencies such as the Office of Housing and Community Development and with some of the organizations that provide services to community groups. And when I make reference to people in the community, I'm talking about a unit as small as a block group or a volunteer civic association. There is really no need for every community to have a real estate development 115 BILL NO. 000344 organization or a Community Development Corporation. But I do believe there has to be some community initiative, a block group or the religious congregation or from a business group or some other entity that's going to devote some time to --
So let's say you have an organized block. What would they do?
The first thing that they would do, in terms of the Office of Housing and Community Development, would be to work with the neighborhood program coordination staff, individuals who do nothing but work with local groups to expand service delivery and plan for new programs. That would really be the first step.
And out of that process they can expect that if they have reasonable ideas or reasonable requests, that they will be funded?
Some of those groups have then received predevelopment funding from organizations that the Office of Housing and Community Development has funded, such as the Local Initiative Support Corporation or the Reinvestment 116 BILL NO. 000344 Fund. Other groups have received assistance in planning design work through the Community Design Collaborative, which is also funded through the block grant. So, yes, there is a progression in activity that follows that engagement.
Similar to the information you provided last year, could you get me a listing of Years through for all of the tax 12 credit projects; name of the project, location, 13 dollar amount, number of units, and what year that 14 tax credit deal was done? 15
Tell me a little 18 bit about the capacity-building capacities of OHCD 19 as it relates to either existing or possibly new or 20 start-up community-based organizations. 21
I would ask Belinda Mayo 22 to say a few words about that. 23
My name is Belinda 24 Mayo, and I am the Director of Neighborhood Program Coordination and Community Development at the Office 117 BILL NO. 000344 of Housing and Community Development.
Yes, it is. It is on 148, Community Organization Capacity Building, at the bottom of the page under Community Organization Capacity Building.
What we have done is, we have provided a number of training and technical assistance programs over the year that were specifically focused on physical development projects. And we have continued -- we continue to do that in the Year 25, and propose it in Year 20 in a slightly different manner. 21
In the past we have had long-term training programs that actually work with nonprofits that were newly emerging or already established to get hands-on training and extend the training periods like one year to six months through the Community Development Institute, which is a project of the Reinvestment Fund. We seem to have come to a point where most of the groups that have development capacity or can be trained to create capacity have sort of gotten as much training as they can use. And now what we have done is, we have set up a series of specialized training programs through the reinvestment fund, again, that focuses on planning, on specific types of programs. Since there is a broad array of housing development and community development programs, we sort of focused on those. And we have identified those programs through a series of surveys to the groups that say, what kind of training do you think you need to pursue your development agenda for the next year. And we have continued to do that through the reinvestment fund, but we have also 119 BILL NO. 000344 established a program with the Local Initiative Support Corporation that funds the same kinds of programs, again based on a survey of the needs of the groups. So there is a series of workshops that focus on physical development, different types of community development and housing-related services, but also economic development. And those workshops are held on a regular basis through lists and through the Reinvestment Fund. In addition to that, we provide funding support to the Philadelphia Neighborhood Collaborative to provide technical assistance, grants as well as services, to the nonprofits and the CDCs that are members of PIDC. Those workshops are open to any group in Philadelphia. And what they do is, they, again, focus on the needs of the groups, but also have some specialized areas. One of the things that we are pursuing now is helping groups to develop web pages and to also increase their information technology capacity so that they can communicate on a different 120 BILL NO. 000344 level. We have also focused very squarely based on the investment in rental housing by this program and by the CDCs in making sure that the nonprofits have property management experience and capacity. There are no nonprofit property management entities in the city, but there are many, many for-profit. And what we have done is tried to encourage CDCs that own more than 100 units to become more involved in property management.
Let me ask you a question on that. I mean, of all the CDCs that are doing work out there, you are saying that they are not managing their properties?
They are. In fact, some of them are managing their properties. It is not cost effective for ACDC to manage properties if they have less than 100 units.
There are different entities. Penrose Properties has a management 121 BILL NO. 000344 company. Interstate is a management company that's based in New Jersey, but provides a lot of management to CDCs in Philadelphia. But both organizations provide management services that are transitioned eventually to the CDC staff. There is a mentoring relationship that is established that helps the CDC understand how property management works, how to protect their assets, and so forth. So there is a transitioning process that takes place in most instances.
Let me go back to something you mentioned earlier. How many groups are participating in these training programs?
Well, right now, if you look at the universe of CDCs -- and there is no 20 process for certifying a group as ACDC -- basically if they have bylaws and articles of incorporation that commit them to community development, then they are ACDC. OHCD doesn't certify a group. But what we do is, we do certify that they have the 122 BILL NO. 000344 organizational structure to manage a program, to manage a project, and to manage federal funds. Right now I would say there are about 35 groups at different levels of capacity that would work with this program.
We have a directory of CDCs and nonprofits that we have had a funding relationship with. However, the Philadelphia Association of Community Development Corporations has a more extensive list and a web page that provides ongoing information that we support.
The PA CDC list, are those the same people who are participating in the training programs you are talking about?
Well, PA CDC don't participate in the training program. They do provide some technical assistance to CDCs in developing web pages and other information technologies.
Now, does the 123 BILL NO. 000344 office make a distinction between ACDC and a community-based organization which may not necessarily be in the development business, but they are more involved in social or civic activities in a particular area.
Well, there is a natural distinction. Some are capable and have the capacity to carry out real estate activities, and others don't. However, we don't discourage groups that don't have that capacity. What we say to them is that, as a community-based organization or as ACDC, as long as you are involved in community development, then you are in fact a development corporation. We try to encourage people to develop partnerships with more experienced nonprofit and for-profit developers, so that they can get community development and housing activities underway in their neighborhood. We also try to encourage them to understand that whatever services they have been providing at the neighborhood level are as valuable 124 BILL NO. 000344 as the physical development. Because without those services, the physical development would be just that, it would be developing buildings, but not providing those services to individuals.
Last question. What, in your estimation, does the nonprofit CDC at whatever, however you evaluate what their capacity is, what do they get out of their partnership with the for-profit developer when all is said and done?
Well, those relationships are usually worked out in partnership agreements. In the past there have been for-profit developers that have worked with neighborhood organizations and provided a small portion of the developer's fee to help the organization with its operating costs. More recently, groups like Universal Community Homes have been successful in developing partnership agreements that give them more, more responsibility and more participation in the decision-making process around the projects and also a bigger share of the developer's fee.
What about on the 125 BILL NO. 000344 experience and the learning curve and ultimately being able to do development on their own, without the for-profit developer?
Well, again, Universal Community Homes is probably the best example. They started out in a partnership agreement with a large for-profit developer in the city. And they slowly and gradually have built their capacity. So that while they may still have those partnership relationships with the for-profit, they have taken on more responsibility for the projects and they have taken on larger projects. We spent a lot of time recently working with church congregations that have spun off CDCs. We have helped them understand the difference between the nonprofit church status and the nonprofit status as a Community Development Corporation. But in doing that, we have also helped them understand what are the responsibilities and risks that they take on in doing a project that involves multiple funding sources and legal commitments to getting the project done. 126 BILL NO. 000344 And more and more those groups are looking to establish CDCs, but also looking for partners that can work with them and help them learn the process.
Thank you. Mr. Kromer, last few questions for you. Can you give me an update on the status of -- I made a request, I believe, during budget hearings about an analysis of the housing that has been produced that primarily is listed in the back of the plan on the HUD 100 loan page. I believe I had asked you and the Budget Director at the time, who is unfortunately no 16 longer with us, to give an analysis of the taxes generated to the city as a result of houses coming back on line as a result of either rehabilitation or new construction. Do you know where that project is?
Yes. The Finance Department had requested some information from the Office of Housing and Community Development to begin analysis. That information was provided. And 127 BILL NO. 000344 my understanding is that a methodology has been worked out and that the analysis is being done. I believe it is fair to say that the results of that will be available this month, and that Finance could provide some comments on what the analysis is producing prior to the time when this bill is considered for final passage. So although the analysis is not complete, I believe all the materials are in place, the methodology is in place, and the work is being done.
I don't know. I would have to ask Finance. But I can get an estimate for you before the end of the day.
All right. Have you, through the budget process, the city budget process, sought any city funding for administrative or program delivery costs that are now being covered by CDBG funds?
So I assume since you never asked, you have no idea what the city response would be?
My experience has been that the city has followed the pattern established in other cities, in which the Community Development Block Grant itself pays for the associated operating costs. And I believe that is the approach that continues to be supported here in Philadelphia.
Not withstanding the fact that if we made a shift, you would be able to put more CDBG funds out on the street?
You and I had a conversation not too long ago, and I shared some backup information with you about a particular project out in West Philadelphia that involves one house. It is for a lady by the name of Ms. Drake. And I think you were going to get back to me on what we might be able to do with that. 129 BILL NO. 000344
I'm sorry. I believe that property is being acquired through eminent domain, but I will check with the Redevelopment Authority and again confirm that with you today.
Lastly, about two years ago, in Mayor Rendell's cabinet room, you participated in a meeting with a group of clergy members from West Philadelphia, a project called the Phoenix Project. I believe they were trying to acquire and renovate upwards of 300 houses in various parts of West Philadelphia. Can you tell us or tell me what's going on with that?
The Redevelopment Authority staff can provide more detailed information, if that would be helpful. But my understanding is that the major stumbling block to moving forward with that plan had been the lack of information from the sponsoring organization about how the rehabilitation would be financed. And that really is essential, if the city is going to commit funding through 130 BILL NO. 000344 Redevelopment Authority to acquire property. And I don't believe any information whatsoever about a development financing plan had been received. And I would really be reluctant to support moving ahead on acquisition without something more substantial.
Well, have you had any conversation with Reverend Staley in recent times about that?
I know that Redevelopment Authority staff have attempted to get that information repeatedly. But if another meeting would be appropriate, I would be glad to participate. But I know that the effort has been made repeatedly to obtain that information.
I would appreciate the followup on that. Lastly, on the Francis Drake matter, it is my understanding that the property is actually in the city's inventory. I don't think acquisition is necessary.
Good afternoon. On , in your Resource Comparison, under Resources from the Commonwealth of Pennsylvania, Housing, in Year was 3,215,000. 11 Year 26 you have 2,300,00, 915,000 decrease. 12 Could you explain that? 13
Yes. Funding from the 14 Commonwealth of Pennsylvania has decreased steadily 15 during the past few years, from a point where five 16 years ago the city could count on $4 million, and 17 now, as you see, our expectation is to receive 18 roughly half of that amount. 19 I believe that one explanation for 20 that drop in funding has been a decision in 21 Harrisburg that applies to the entire state to 22 divert more funding to main street programs and 23 other economic development activities that can be 24 supported across the Commonwealth. 25 Regardless of the motivation, 132 BILL NO. 000344 however, the drop is substantial. And it means basically that the very effective repair programs administered by the Philadelphia Housing Development Corporation are cut in half. And half of the people that we were able to serve, half the number of people we were able to serve, are not being served during this coming fiscal year. That's really a very serious problem, particularly given the housing preservation, housing conservation needs that we face. And I'd like to say that, you know, if we lobbied harder with the state for more funding, we would get more. But, in fact, the Mayor's Office has lobbied extensively for more state funding. An approach, which as I have indicated previously, I would like to try to propose, and I have proposed this to the Mayor, is one in which perhaps we could leverage more state funding by putting on the table some of our funding and linking it to some of the state's interest. For example, we discussed the very effective home repair program that the FOB community development corporation has undertaken. And I 133 BILL NO. 000344 appreciate the detailed information that was provided to me about that program. I'd like to propose to the Commonwealth that perhaps we leverage our resources so that we can extract more funding from BCED for programs that we're committing dollars to repair. And if in the coming year we only succeeded in leveraging on a one-for-one basis with Philadelphia plan groups, we would still have a very substantial amount of new funding. I believe the FOB program, for example, is currently funding $80,000 worth of repairs. And if we would leverage an equivalent amount, that would be quite an accomplishment. So with the support of the Mayor's Office, I would like to take that initiative to Harrisburg this summer and see if we can't free up some more state funding for that kind of activity.
Are you saying in past years -- because we have a new Administration now -- that there was not a real strong lobbying effort to capture or increase or maintain the number of housing dollars for the city? 134 BILL NO. 000344
Well, rather than commenting on past years, I can say that this year a very strong lobbying effort was mobilized by the Pennsylvania Low Income Housing Coalition, with dozens of community-based organizations in Philadelphia and around the state. And a very effective outreach effort was made, some very effective contacts with suburban and rural legislatures which appeared to be promising, but unfortunately did not yield the results expected. That, I think, was the best possible advocacy effort that you could have seen for housing in Pennsylvania this year. And, unfortunately, it didn't succeed. So we will need to try another approach.
I want to go to, we have an ongoing discussion about Logan. And I won't go into the details, because we do have hopefully a working task force to resolve some of the issues around Logan. But I noticed in the budget we only have, and I lost it, I think $412,000, of four-hundred-and-some-thousand dollars, for Year 135 BILL NO. 000344 26. Is that just to cover the remaining families there?
The amount that's budgeted for Logan acquisition and relocation is on , and that is level with previous year's funding, $3 million, the third line down, Item A3. The other references to Logan on that page refer to repayment of prior years' Section 108 financing. But the amount being proposed for this coming fiscal year for Logan is equal to that in the current year.
So that's proposed to be level. And my expectation is that amount would be needed to cover the remaining eligible cases. And that, in addition, we would have some substantial activity related to the property 136 BILL NO. 000344 acquisition, and the planning for the future of Logan, and the disposition of the properties that are held by the Logan Assistance Corporation.
Last year there was an effort, there was a commitment of money given to the city, supposedly $1.5 million, from the state for residents of Wissinoming, and part of the money to go to Logan for those people who are classified as ineligible. Would that money have come through your department, if it were requested by the city?
No. And I was not familiar with the funding for Wissinoming. I heard about it, but the city's housing agencies were not involved.
So you got none of the money that was appropriated by the state, the $1.5 million --
So all of the money probably went to Wissinoming? 137 BILL NO. 000344
Thank you. Are there any other questions from members of the committee or members of Council? It took us a little while.
Well, I guess I want to go back. And maybe you did answer the question. On the acquisition and disposition of vacant properties, did you give us a good answer on that, in terms of trying to speed up the process? Because it is so lengthy. Because we are going to be talking about blight removal, and spending $250,000,000 on blight removal. But unless we change some systemic problems that cause us to have these vacant properties, and allowing them to sit forever and not being able to acquire them, I am afraid we will throw good money after bad. So are we really working on changing the way we are able to acquire a vacant property, 138 BILL NO. 000344 and move it on to the next owner?
The Year consolidated 4 plan does not contain the solution to the problem 5 that you are looking for and that we are all looking 6 for. It basically calls for a continuation of 7 existing programs. 8 And rather than say, well, that will 9 all be taken care of in the future, let me say that 10 I think two issues have got to be addressed. 11 One is organization. We have got to 12 be better organized to deal with the problem on a 13 citywide basis. And the other is money; there has 14 to be some funding to support property acquisition 15 on a larger scale. 16 What I can say about the immediate 17 future, that is, the summer months ahead, is that 18 there are two approaches that will be underway in 19 neighborhoods to use our existing resources in the 20 plan more effectively through better organization. 21 One is applying the expanded 1202-A 22 program, so that L & I can authorize many adjacent 23 owners to take control of side lots next to them, 24 and we can begin moving those lots at a higher 25 volume through the sheriff's sale process. 139 BILL NO. 000344 And the other approach is the neighborhood sweep approach, in which we go through a targeted area and on the spot make the decisions about demolition, encapsulation, but also vacant property conveyance, some of which could be funded through the Community Development Block Grant program. That's not the comprehensive approach that we all need, but it is a first step towards getting better organized and using these available resources more effectively.
But sometimes I don't know if you need a program to look at the process. I think the process needs to be reviewed, as to what new policies may need to be implemented, what rule changes need to be made to make it easier. And that's an internal piece to the departments that handle all of these transactions, coming together to sit down to talk about, what do we do now, and why doesn't it work, and what can we do to make it work. I think that that is the discussion that needs to take place. 140 BILL NO. 000344 I had someone try to acquire a building, and it was taking forever. It took a hands-on to get the process through. I mean, even to the interaction with the Law Department, getting the Law Department to move with the settlement papers, or whatever the contracts or whatever you have to do with this stuff. But I don't think you need to -- well, maybe you do. But I don't believe right now that there has to be any dollars appropriated for thinking about what the solution should be to resolving the issue, and that's what I want. Because if we don't do that, I have properties that are sitting in my district, they're vacant, the taxes are paid, but they are a neighborhood nuisance. The grass doesn't get cut, we have to constantly call about getting the place boarded up. And it shouldn't be allowed to sit like that. And we don't need a program for that; we just need some action by the city in terms of a policy on how we are going to handle that. And that's what we're looking for. 141 BILL NO. 000344 Because if you don't, my district and other areas where there is no blight, you are going to have blight, because you are going to end up with a lot of vacancies, or the house will have to be demolished in the middle of a block that's solid. So a quick resolution to it has to come about, it has to come about. Otherwise, we are not going to be successful in dealing with blight.
Absolutely. And I can say in the fairly short time that Patricia Smith has been here as Head of the Blight Initiative, most of our communication has been on that subject, how can we improve the process and get things done. Not only with regard to existing blighted areas, but areas that need to be conserved, where we need to prevent blight.
Mr. Kromer, thank you. I know as always you will stick around for any special concerns that we have. Thank you very much. Mjenzi Traylor, Department of Commerce. Good morning. Would you both identify yourselves for the record and being your testimony. 142 BILL NO. 000344 Thank you for your patience.
Good morning, Councilwoman Blackwell, Members of City Council. My name is Clarisse Wynne, and I am the Acting Deputy Director of Commerce. I am here today to present testimony in support of the Fiscal Year 2001 consolidated plan. With me this morning is Mr. , President of Philadelphia Commercial Development Corporation; Mr. William Hankowsky, President, Philadelphia Industrial Development Corporation; and also Jim O'Toole from the Commerce Department staff; and other members of our respective staffs. Before I begin, I want to thank this committee and City Council for agreeing to expedite this Public Hearing and consideration of this bill. My comments this morning will summarize and to some degree expand on the economic development section of the consolidated plan. Philadelphia's neighborhoods play a pivotal role in the city's economy. Most of the city's economic activity takes place in its 143 BILL NO. 000344 neighborhoods. To ensure an improved quality of life for the majority of our citizens who reside in our neighborhoods, we targeted neighborhood economic development as our number one priority. The city's approach to neighborhood economic development encompasses three goals: Assisting small neighborhood businesses; investing in neighborhood physical infrastructure, including housing; to improve the business environment near residential areas; and fostering the growth of community economic development skills and capacity, particularly within Community Development Corporations, CDCs. These goals are reflected in the broad array of neighborhood economic development programs, initiatives, and accomplishments of the past year. To help meet these goals, we will be expanding our targeted CDC support efforts in Lower Germantown and Eastern North Philadelphia. Our basic lending and grant programs are divided between the Philadelphia Commercial Development Corporation, PCDC; the Philadelphia 144 BILL NO. 000344 Industrial Development Corporation, PIDC; and the Commerce Department. Small business lending and facade improvement programs are implemented from PCDC. In the coming years, PCDC's small business revolving loan program will be funded at $1,650,000, the Facade Security Rebate Programs will be funded at $220,000, the TNCA Acquisition Program will be funded at $100,000, and an additional $500,000 will be dedicated to the completion of the Italian Market Canopy Program. The Housing Contractor's Program will provide approximately $1 million in lending. PCDC will provide support for the Small Business Support Center and the Micro Loan Program. These efforts are funded principally through nonCDBG resources. PCDC will continue to operate Targeted Neighborhood Commercial Area, TNC, program. This program provides an array of support services to 38 commercial areas. A listing of these areas is attached. In addition, PCDC will provide direct assistance to for-profit businesses and nonprofit organizations which act as key service providers and 145 BILL NO. 000344 employers in these commercial areas. The principal goal of the TNCA program is to enable these businesses to remain and to expand, while providing needed goods, services, and employment opportunities for Philadelphia's low- and moderate-income residents. PCDC will provide acquisition grants to community-based development organizations, CBDOs, located in TNCAs. The CBDOs will acquire and improve the properties. After the improvement is completed, the CBDOs will either lease or sell the properties to businesses, which will provide retail goods or services to the low- and moderate-income residents of that neighborhood. 4. Businesses will be required to create at least one permanent full-time equivalent job for every $10,000 of grant assistance. It is anticipated that at least 10 146 BILL NO. 000344 properties will be acquired, renovated, and occupied. Our major commercial and industrial lending programs are administered by PIDC.
These include the CDBG Mortgage Loan Program, the Neighborhood Development Fund, and the Section 108 Loan Programs. 9 million will be used to support the Mortgage Loan and Neighborhood Development Programs. PIDC will bring down Section 108 funds to assist in larger scale development projects and to support our neighborhood lending programs. The primary goals of these Section 16 108 loans will be to create permanent jobs for residents of Philadelphia, to stimulate private investment, and to generate tax ratables for the city. While the creation of jobs for low- and moderate-income Philadelphians will be the key criteria of these loans, the expansion of retail goods and services in our neighborhoods and the elimination of blight will be alternative criteria. The projects approved for the Section 147 BILL NO. 000344 108 loans will be appropriate to the city's overall economic development strategy as presented in the Economic Stimulus Program and as proposed in the five-year plan. At Commerce we will offer different levels of grant support. One effort will be to support pre-development project grants. Another will be to support planning and marketing grants. A third will be to support Special Service District Programs in West Philadelphia, Germantown, and Frankford. We will continue our targeted neighborhood support services grants, we will provide support to organizations on the American Street and West Parkside Enterprise Zones, Germantown, West Philadelphia, South Philadelphia, Frankford, Central North Philadelphia, and Eastern North Philadelphia. I would like to take this opportunity to thank Council for their ongoing commitment to the Office of the City Representative and Commerce Department's economic development activities. I look forward to working closely with the members of Council to continue to 148 BILL NO. 000344 strengthen the economic base of the cities. My colleagues and I are pleased to respond to any questions Council might have.
Mr. Hankowsky, Mr. Jones, would you gentlemen like to speak? Do you want to ask your question first, Councilwoman, or do you want to hear the others?
On your testimony, you talk about your Small Business Revolving Loan Grant funded at 1,650,000. What is the average of small business loan grants you give?
Under the small business -- hello. Good afternoon. My name is Curtis Jones, I am the President and CEO of the Philadelphia Commercial Development Corporation, 149 BILL NO. 000344 PCDC. Your question was, what is the average size of a deal or loan produced by PCDC. Over the years, it has increased from $50,000 to, on average, $100,000 per deal.
Or default rate, to phrase it differently, is less than 5 percent, which is better than some banks, which disspells any myths about the creditworthiness of some people within low- and moderate-income neighborhoods. Our deals actually repay better than most banks. And that is a testimony to some of our lenders and volunteer staff from the banks that help to make those credit decisions.
Of your Facade Program at $200,000, is that economic stimulus 150 BILL NO. 000344 money?
So the economic stimulus money is a different pot that can be used for any kind of economic development programming?
When you say you work with the business strips in the community, what does that mean?
We are contracted to deal with 38 commercial corridors in the City of Philadelphia that are considered low- and moderate-income areas. We range from anything as it relates to providing collective advertising. We put in curbs, sidewalks, trees, and lighting in many of those strips. If you look at the canopies on 52nd Street, some years ago we put those in. And Councilwoman Blackwell fought very hard to make sure that we maintain those. And, so, we do that. When you look at 5th Street, 5th and Lehigh, whether you are talking about medallions that were placed in the streets, we put in trees, we 151 BILL NO. 000344 took out trees, we moved and put back in trees, depending on what the business association felt was in the best collective interests of the strip. We have done things with them that have helped them to do everything from a block party, to encourage residents to shop within the corridors, to work with them along 60th Street to work with SEPTA to plan better, some of the reconstruction of the Elevated project. So it varies from corridor to corridor on what type of services we provide. Some of our older corridors, like Manayunk, that were graduated out of the program, when we first started in those days when Manayunk was not a hip spot to be in, we worked with the business association there to the point that it is now self-sufficient and doesn't need our kind of assistance, to less sophisticated corridors, which I won't name, which need help in organizing bylaws, articles of incorporation so that they can receive money beyond what the city has to do for RFPs and things of that nature. So it varies from commercial corridor to commercial corridor. 152 BILL NO. 000344 We don't just deal with business associations. In some neighborhoods, the CDC is the dominant organizing entity in that area. Like neighborhoods like NAB, Neighborhood Action Bureau, is an example of that, where the business association works in conjunction with the CDC, but the CDC is the most active, the most organized. So, therefore, we funnel resources through them.
Some time ago I know that in response to a request I made of the city to recognize the diversity of the business owners in our districts, particularly for me on 5th Street, we asked you to employ someone who could communicate better with the merchants. Is that employee still there, and what are you going to do to expand that? One of the problems we do have is still the communication around zoning issues, what should be, what should not be. And I'm not sure that the communication is as strong or as clear as it should be.
Councilwoman, I read testimony from prior years. And one thing I have gotten is that with 5th Street we want to deal with 153 BILL NO. 000344 retail, not wholesale. So before we start, I want you to know I have it, my staff has it. As a matter of fact, I had them exercise a drill where they said, "No more wholesale on 5th Street. We want to do retail." So I have gotten that. We employed a gentleman at your insistence to find an Asian --
But you did ask me for a recommendation, and I went to the community. It is not my person.
We basically recognize that on our commercial corridors, like other major 154 BILL NO. 000344 cities, the influx of Asians, the influx of Hispanic people, the influx of people from Dominican Republic was a strength and actually helped to revitalize certain areas within the City of Philadelphia. We also realized that because of that diversity, we needed to take strides to be multi-lingual, not only in our verbal presentation but in our written packages. So we employed several Hispanic representatives within our agency, but also a Korean representative, a commercial area specialist, who not only was very versed in languages and spoke several languages, but also was able to put together a piece of software that could translate our documents into not only Spanish, but in Korean. And that employee has been with us now -- how long now, Bob? I'm seeing numbers. I can't see that far. Three years. And his name is Mr. Poc. And he not only works with us in our commercial area department along our corridors; but whatever deal coming in from whatever area of the city, he helps us to translate and also to understand the different cultures. 155 BILL NO. 000344
One of the requests I make is that a stronger communication be sent to the association in the community about no 5 wholesale. I'm not sure that that message it getting out. The other issue, how do you help with the Special Service Districts, the one in West Philadelphia and Frankford and the other areas that you mentioned?
Currently, we have a good working relationship, particularly with the Frankford Ministry Group and CDC. They provide the special services. They have what is a corridor manager that goes out and works with the business associations. We too have a similar job category, where we provide a lot of the rebates and grants for facade treatments and unified signage. Recently -- I don't have the exact numbers in front of me, maybe Dave will give me those numbers, but we did a number of signs along 156 BILL NO. 000344 the commercial corridors to make sure that they were unified and make sure that they met city code. So we work with those individuals to coordinate resources both from our funding source, CDBG dollars, but also through their funding source, and we worked closely with them. I would like to introduce Mr. Dave Boyd, who is our Vice-President for Neighborhood Commercial Development. He can specifically respond what we have done for you lately.
We are currently working up in Frankford -- my name is Dave Boyd. I work for Philadelphia Commercial Development Corporation, I am the Vice-President for Neighborhood Commercial Revitalization. Currently our facade program, which is a program where we go into a neighborhood, commercial area, that's been targeted for the program, and provide facade improvements to all those businesses that want to participate. Currently we are in Frankford. We will probably use up all the funds that we have available for this program year in Frankford. It will be the only facade program area this year. 157 BILL NO. 000344 The amount of money, I believe, for the next program year is $200,000. And usually that will provide for maybe one to two commercial areas. One of the areas that is in consideration for this program for next year is 40th Street. We have had the program on a number of different areas. I have a chart I can provide for the City Council to show over the last five, six years what areas have been provided the funding, plus the numbers of facades. 5th Street, we had the program there about a year ago. Again, we have the numbers of facades and improvements and the dollar amounts in the chart I can provide. Probably it was around $150,000, is my guess.
Thank you, Madam Chair. Mrs. Wynn and Mr. O'Toole, if you want to answer the question, how much money is in the Neighborhood Development Grant Program for Year 26?
So there was three-quarters of a million dollars in that program last year, there is no new money proposed for this year for Neighborhood Development Grant Program?
Well, my understanding is that there was no new money approved in the budget. Yes, we would like to have more, but there has been none.
There obviously was a shifting of funds in the budget. If there was $750,000 last year and there is zero this year, someone made a conscious 159 BILL NO. 000344 decision to eliminate the Neighborhood Development Grant Program.
Jim O'Toole. I am with the Commerce Department. Councilman Goode, what we have done in reallocating some funds to ensure funding for the Frankford, West Philadelphia Special Service District Programs, increasing some funding for special targeted neighborhood support, also providing additional funding levels for PCDC, and that basically ate through the $753,000 when that was done. What we want to do as the year goes on is to identify funding either through the economic stimulus program or through other resources that may become available. We have John Kromer's commitment to do that, you know, as projects become available. Right now we have no money targeted, budgeted per se, but we are committed to finding funding for projects as they come onto the books.
Can you describe exactly the types of projects that have been funded in the last three years under that program? 160 BILL NO. 000344
We have done the Thriftway Supermarket up at Broad and Wingohocking. We did the supermarket at 6th and Burke Germantown, also a Thriftway. We have done the Baltimore Avenue Mercy Medical Centers.
Your new strategy is what, to shift dollars away from projects like that for what specific purpose?
The issue comes down to how do you get the resources to get them out. What we did, basically, was to request some additional funding be dedicated for the NDG program, as well as the NDF program, PIDC. But, I mean, that discussion about how to reallocate resources couldn't be resolved at that point in time during the budget, you know, process. And what we have is a commitment from John Kromer, and also in conjunction with the Mayor's Office, that as projects come on line and into us that need funding for acquisition, this structure --
This is a budget the Commerce Department submitted. 161 BILL NO. 000344
One of the areas you said you shifted funds away from Neighborhood Development Grant Program to is a Targeted Neighborhood Support Grant Program. Can I ask a question for the record why are CDCs receiving different levels of support in that program? Why are six groups receiving 50 to 70 thousand dollars, and three other groups receiving 130, 130, and 300 thousand?
Some organizations came in and requested additional funding support. Some of the higher funding levels -- let me finish.
No. One organization is receiving $20,000 more than they received last year. The other organizations have all maintained the same level. The question is historically why are there six groups receiving roughly $50,000, one was increased by $20,000, partnership CDC, and three other groups receiving $300,000, $130,000, and $130,000?
That's higher level funding goes to organizations that have been in the 162 BILL NO. 000344 system a little longer. The smaller grant monies are going to people to basically hire one individual to provide corridor support, which is something that, you know, when you were in the Commerce Department you helped to commit and put through. To extend this outreach to ensure that Community Development Corporations are involved, then they put commercial revitalization process of -- with the city.
For those six groups that I brought in under that program -- and I will name them, The Partnership CDC, Universal Community Homes, Greater Germantown Housing Development Corporation, the CDC of Group Ministries, HASAE, and Allegheny West -- I would say not only were they considered to be more effective organizations, but they were also required to have private matching funds, unlike the organizations receiving more money. Why are all the organizations not required to provide matching resources, particularly those organizations receiving more public resources?
I don't have an answer 163 BILL NO. 000344 for that right now.
And the organization receiving the most resources, $300,000, not required to match any of that, also filed for bankruptcy a few years ago; is that not true?
The organization receiving the most amount of money, and not required to provide any matching funds, receiving six times the amount of money of those other organizations, the six that I brought in, also filed for bankruptcy recently; is that not true?
The Neighborhood Action Bureau is the one that you mention, and that has --
That is not the one I did mention; that is the one I referred to.
It is the one you referred to; I'm sorry. It has received a largest amount of money, at $300,000. They requested additional funding last year, they requested additional funding this year. We said no, we have capped them. Clearly that is a large amount of 164 BILL NO. 000344 money to be going to one neighborhood-based organization. But the Administration, the current Administration, the prior Administration, feels that the organization does an extremely valuable job in that community.
That's still not acceptable to me. Of the six groups I brought in, excluding Universal Community Homes, five are Philadelphia Plan Partners, automatically leveraging a quarter million dollars in private investment a year. The rest are -- all six groups are provided support of Philadelphia Neighborhood Development Collaborative, private sector support from banks, corporations, and foundations. Why is two-thirds of the money going to three organizations without any requirement for matching funds?
Thank you. Anyone can answer this question, as to, Mr. Hankowsky, Mr. O'Toole, what is the status 165 BILL NO. 000344 of the Neighborhood Development Fund? Not the Neighborhood Development Grant Program, but the Neighborhood Development Fund.
First, my name is Bill Hankowsky. I am the President of the Philadelphia Industrial Development Corporation. The status, Councilman, is, as you know from your past experience, we set it up a few years back. And we, I will use the term, set aside dollars that we targeted for that to get out on the street and fund a series of projects, which we did, and most of which, I think I can generally say, were successful, occurred and happened. Currently we do not have dollars available, dollars that are, I will use the term, targeted for or set aside. And as projects come to our attention, we generally look at either the availability of the Community Development Block Grant Program income, the revolve dollars that we have available. Or in past years, the immediate past years, there were economic stimulus dollars under a category called Neighborhood Development that were 166 BILL NO. 000344 available to do that, and we also looked to use that source. And, actually, what we are in the midst of right now is sort of reviewing the availability of those dollars. There were some past allocations that may not now proceed, and it may be wise to, I will use the term, reallocate the dollars.
Do we need to recapitalize the Neighborhood Development Fund at all?
Well, I think it would be -- my sense is that historically it has been a successful program, it has been a valuable tool particularly to the CDC-based groups who were sponsoring various neighborhood-based projects. I would love to recapitalize it. And as you are pointing out in your questions now and previously in this hearing, as other Councilpeople, I think we are all basically in the scenario where we are making allegation decisions among various demands.
And how much do you think it should be recapitalized with? 167 BILL NO. 000344
I would actually have to think about that before I would just throw a number out. I would be happy to get back to you.
Thank you very much. Are there any further questions? Thank you very much.
Certainly. We would now like to call Lee Capkin, Ph.D., Housing Consortium for Disabled Individuals. What we would like to do is try to ask the groups to testify, is to try to keep to three minutes. We realize that certainly that didn't happen at the beginning. And that the process is when the Director comes, then Council has the right to interrogate him, and we have no control over that. We are trying to provide an opportunity so that everybody can get on and get on quickly so that we don't have you here until 10:00. But we certainly in no way mean to 168 BILL NO. 000344 offend anyone. We appreciate all of your patience. We appreciate your coming and we appreciate your love for your community. Good afternoon.
My name is Lee Capkin, and I am the Executive Director of the Housing Consortium for Disabled Individuals. Councilwoman Blackwell, President Verna, other members of City Council, thank you again for the opportunity for me and our organization to testify on behalf of the preliminary consolidated plan for Year 26. We wish to emphasize at the outset that we appreciate the hard work that has been done by all of the city housing agencies on behalf of people with disabilities. We need equally to emphasize, however, that there is an expanding housing crisis facing people with disabilities in this city, and that more and more people with disabilities face overlapping disabilities and many problems of life 169 BILL NO. 000344 associated with low incomes, as well, and that is making the situation harder for these people. We want to indicate our support for the Home Ownership Counseling Association of the Delaware Valley and the Pennsylvania Federation of Housing Counselors, who you will probably hear from later on. As a housing counseling agency, we know of the hard work of these organizations and what they have done to help develop positive and enriched profile for housing counseling and what it can mean to the community and the people the housing counselors serve. I want to highlight the need in this city for fair housing ordinances to be strengthened, so that people with disabilities and all other protected classes under the Fair Housing Act will be able to take advantage of services that could be available to help them from the Philadelphia Human Relations Commission. At this point the city's ordinance is not substantially equivalent to the federal ordinance, and, therefore, it requires that people of all classes that may be discriminated against go 170 BILL NO. 000344 to the state and to the federal government directly for relief. I want to use the rest of my time simply to talk about the city's Adaptive Modifications Program. Most members of City Council by this time probably know that it is one of the most valuable programs that exists in terms of housing for people with disabilities in Philadelphia. And it has tremendous accomplishments to its credit. But there continues to be a waiting list of over 800 people for the services. And the program is tremendously underfunded relative to the need that there is out there. Let me just highlight a couple of things quickly so you can understand the importance of the program. In relation to home ownership, it is well known that the 10,000th person or household of low income took advantage of the city's home ownership counseling program and was able to move into a new home of their own. Well, if people with disabilities who lack wheelchair access to their present homes are 171 BILL NO. 000344 forced to relocate, they would be forced to move into a shrinking rental market of accessible housing, and by and large they could not take advantage of home ownership opportunities in Philadelphia because the homes in question largely are not wheelchair accessible and the people being of low income would not be able to afford the standards of most of the home ownership programs. It has been said that most people with disabilities are getting by somehow while they wait for adaptive modification services. Well, this is true, but they are getting by with limited help, perhaps less than competent help, and being highly dependent, rather than the self-sufficient status that they would like to obtain or at least preserve if they already are in that situation. It is a highly important program, and we are aware that the past Administration was not able to commit to increased funding. We hope that the new Administration will be able to. It is a very important program. We had the pleasure, more broadly speaking, of serving on Mayor Street's Housing 172 BILL NO. 000344 Policy Transition Committee.
And that committee produced a number of very important recommendations for both people with disabilities and the broader low- and moderate-income community. We hope that City Council Members have had a chance to see those reports and will have a chance to act on them. In conclusion, I once again want to thank City Council for the opportunity to come and talk to you today, and to invite your calls to our agency, which you have felt free to make in the past. And we are available to serve constituents from all of your districts, and we want to be of whatever help we can. Thank you very much.
Thank you very much. Thank you for your fine work. Gloria Guard, PEC. While she is coming forward, as many of you know, this is the oldest homeless agency serving people in our state. I am proud that she is from West Philadelphia, and applaud all of her efforts over the years. 173 BILL NO. 000344
Gloria Guard, People's Emergency Center. And my written testimony was submitted last week, so I believe Council Members have that. In the interest of time, those of you who are not familiar with PEC can read a detailed description of the organization in that written testimony. And, thanks to Councilwoman Blackwell, you know a little bit about what we do. We have a number of comments today on the plan, one general and several more specific. And I will try to be brief. My general comment is that the plan budget shows a substantial decrease in resources from the Commonwealth. And I have heard testimony earlier today on this point that reveals a $915,000 decrease from DCED, as well as $148,000 decrease from DPW for case management. 1 million 174 BILL NO. 000344 cut in state funding in these critical areas. We urge the city to address this issue with the state. Specifically I have comments in three sections: Homeless and special needs housing being one, the second the intersection between homelessness and Welfare reform, and finally broader community revitalization. Let me start with homeless and special needs housing. In this environment, when Welfare reform is likely to significantly increase the number of homeless families, and with the overwhelming demand for public housing, those two items have created a log jam in the homeless service system. So we believe the city needs to place the highest priority on addressing the issues of housing for the homeless, particularly for families transitioning from Welfare to Work. We recommend OHCD for recommending that the city continue its recent practice of a specific setaside for homeless and special needs housing, and we urge City Council to once again support this. 175 BILL NO. 000344 That setaside has had a tremendous and positive impact for PEC and the people we serve in terms of assured new housing units for the homeless. Specifically, we have taken over 100 vacancies and turned them into housing units in the Councilwoman's district. The impact of these designated funds was enhanced because OHCD simultaneously instituted a planning and funding cycle, which makes it very easy for local nonprofits and service providers to get the needed funding they need from multiple sources. We are pleased that OHCD seems to recognize the link between addressing homelessness and improving public house, as reflected in the chart on . That link must be emphasized. We realize that since 1993, OHCD has made the improvement of Philadelphia's public housing system one of their six top priorities. And we recognize this as important progress. However, given that access to public housing is the only way out of homelessness for most of our clients, we strongly urge OHCD and PHA to 176 BILL NO. 000344 consider creative and effective ways to partner to increase and expedite access to public housing for the homeless. Some preliminary ideas are a more formalized relationship between PHA, OHCD, and the Housing Committee of the Blueprint To End Homelessness; a significant commitment on the part of PHA to make access to public housing for the homeless a priority; and some additional ways that might be considered would be an RFP to award Section 12 8 project-based certificates to CDBG-funded homeless housing projects, or to think about a creative approach to working with homeless service organizations with strong development capacities so that they can convert vacant PHA-owned properties in their communities into homeless housing with the ACC operating subsidy attached. We commend OHCD for trying to address the issue of continuing to reserve funds which will remain unspent for extended periods of times. And we believe that their plans to review all of the prior years' funding commitments for housing production ventures at the beginning of the Year 25 and to evaluate the likely need for obligation or 177 BILL NO. 000344 expenditure of that funding is an essential one.
As a result of this evaluation, we hope that OHCD considers shifting unspent funding into special needs housing programs and also into other categories; such as, the Basic Systems Repair Program. The second area I would like to talk about is the intersection between homelessness and Welfare reform. The plan talks a lot about the devastating impact of Welfare reform and the result in increased demands on city services. The proposed strategy maintains that CDBG and home funding for critical housing community development needs, and it does not divert any specific funds for Welfare reform. The plan states that the city has taken a number of steps to lessen the impact, including increasing spending on homeless services, health centers, and human services. This is very positive, but there are more ways that the city can use limited CDBG funds to help lessen the impact of Welfare reform. We believe that one such project that 178 BILL NO. 000344 the city could enter into is one developed by PEC called Families First in the 3rd District. We have requested $300,000 to be used towards the construction of Families First, which is a multi-service center for families moving from Welfare to Work. It is connected to all of the special needs housing in the neighborhood for the very same homeless families. Families First would house a job opportunity business skill program, which would enroll 150 to 300 women annually through employment preparation, counseling, and jobs training programs. It would also include a 140-child child care center available and open to children of mothers who are being impacted by Welfare reform. And as a model, this is the only place in the city that we know of that will have job training and child care on the same site. In addition, it will have a culturally competent healthcare preventive service center for the women and children who are there. One of the most interesting parts of this project is that we have secured 100 percent of 179 BILL NO. 000344 the operating funds and are now only looking for the bricks and mortar funding. We urge the city to provide that gap funding. And, last, I would like to just speak just a few points about broader community revitalization. We support OHCD's decision to provide renewal funding for the Model Block Program under PNHS. And we want to include the Model Block approach and PNHS on Green Street in our neighborhood. That will help fix the facades of current residents who live there, homeowners with money that otherwise would not be available to them because this is not new housing. We are pleased to see that Lancaster Avenue corridor from the 4000 block to the 4600 block is one of the 38 areas designated to participate in PCDC's Targeted Neighborhood Commercial Area Program. This is also the area in which we work. And we believe that the security Rebate Program, Uniform Facade Repair Program, and TNCA Acquisition Program are very useful tools for 180 BILL NO. 000344 achieving the objective of enabling businesses to remain to and to expand in those areas, while providing the needed goods and services that our residents need and want. An important complement to PCDC's activities would be to expand the University City Special Services District up Lancaster Avenue in tandem with the expansion of the Targeted Neighborhood Commercial Area Program. In closing, we feel very strongly that the administration, with John Kromer's leadership at OHCD, has made a truly significant impact on the landscape in Philadelphia. In PEC's neighborhood alone, which is a very small one, nearly $13 million has been used to restore formerly vacant and abandoned properties and lots into much needed new housing units, vibrant and beautiful playgrounds and tot lots and gardens. This kind of radical neighborhood transformation would not have been possible without CDBG funds, and those funds would not have been available had the special needs housing not been a specific category of funding.
We recognize the hard work that went 181 BILL NO. 000344 into preparing this plan and hope that our recommendations will be given careful consideration. Thank you.
Thank you very much. Are there any questions from members of the committee or members of Council? Thank you very much, Gloria. Ben Dugan, Powelton Village Civic Association. Again, an excellent group in West Philadelphia. They do a fine job in Powelton and we applaud your leadership.
Thank you very much. Councilwoman Blackwell, I am Ben Dugan, President of the Powelton Village Civic Association. I am here today to request $15,000 as a block grant for the Community Education Center, which is at 3500 Lancaster Avenue. With your permission, I will just read our short request here. The Powelton Village Civic Association is requesting a block grant $15,000 to 182 BILL NO. 000344 support renovations to the side yard of the Community Education Center so that this currently unutilized space can become a functional and attractive site for children and adults attending programs at the community center. The community education center is a nonprofit cultural and community center located in the Powelton Village neighborhood of West Philadelphia. Founded in 1973, its mission is to promote interaction among people of diverse backgrounds through cultural and educational programs, serving the residents of West Philadelphia and artists citywide. CDC services include varied and low-cost programs for children; an after-school summer camp and performance series; and diverse cultural events for adults, the New Edge Performing Artists Residency Program, jazz workshops, and concerts, feminists' film video series, and new world theater series, as well as classes and workshops. The CDC is located in a former Quaker meeting house and school currently owned by the 183 BILL NO. 000344 Redevelopment Authority at leased to the CDC. This property includes an extensive side yard, approximately 30 feet in width, and the length of a city block, which could serve as a play space for children in the after-school program and park space for adults attending the many cultural events, as well as for neighborhood residents. However, this space is currently undeveloped and made inaccessible by an 8-foot-high chain-link fence. The CDC is initiating a major campaign, capital campaign, to fund a number of external improvement projects. To kick off this campaign, the CDC proposes to develop the side yard into a park/playground, which would enhance the CDC's role as a public gathering place. The PVCA is requesting funds to support this project which would benefit the appearance and community life of our neighborhood and the entire West Philadelphia region. The CDC proposes to develop the front portion of the yard, approximately 30 by 40 feet, as a pocket park, with benches and landscaping. The 184 BILL NO. 000344 rear portion of the lot would be maintained as lawn and play space. We envision three major components to this project. Number one, replacement of the chain-link fence with gated wrought-iron fencing, which would permit access from Powelton Avenue and be consistent in appearance with the iron fencing in front of the CDC building. This we estimate would cost $6,500. Number two, we would like to establish a sitting area with surfacing and benches. We estimate that would cost $4,500 for consultation fees, materials, and labor. And the third item is landscaping, which we estimate would cost $4,000 for architects' fees, purchasing plants, and labor. That's all I have to say.
Mr. Wingfield? I didn't see him today. Charles Wingfield. While we have Taylor Frome and Angel 185 BILL NO. 000344 Rodriguez, Dana Taylor-Jones, and Jose Valequez come up from YouthBuild Charter School, let me announce that we will break from 2:00 to 3:00. We will try to get in everyone before. And, if not, we will take that break and come back. That's from 2:00 to 3:00, so everybody understands. Thank you so much for your patience and the excellent, excellent job that you do. Please identify yourself for the record and begin.
Good afternoon, Councilwoman Blackwell and honorable Members of City Council. My name is Taylor Frome. I am here today as a Founder and Former Executive Director of the YouthBuild Philadelphia Charter School. I am also here to introduce Angel Rodriguez, who is YouthBuild's new Executive Director and one of our graduates, Danatay Jones. Unfortunately, Jose Valequez was not able to make it today. We are here to provide an update on the status of YouthBuild and the support we receive from you through the Office of Housing and Community 186 BILL NO. 000344 Development. With this support, we have been able to provide the YouthBuild training to more than twice as many youth as any other city in the United States by supplementing the monies we receive from HUD. We are finishing our eighth year as a YouthBuild program and your third year as a charter school. Our school combines individualized academic education with on-the-job training and construction. And students spend half their time at the construction sites and the other half in classrooms. All of our students are former high school dropouts who have decided that they want to get their lives together. This year 200 students enrolled at our two school sites, one in North and one in South Philadelphia, and we expect close to two-thirds of them to graduate this June. During the year, they completed the rehabilitation of 11 houses in North, South, and Northwest Philadelphia. 187 BILL NO. 000344 Danatay is here to represent all of the students who will be graduating this month with high school diplomas. They are busy on their portfolio presentations, which are one of the graduation requirements that our students have. YouthBuild has over 500 other graduates and has built 45 houses for low-income families in Philadelphia. Over 70 percent of our last three graduating classes have gone on to full-time jobs or continued their education. OHCD has supported us by exceeding or matching our HUD YouthBuild grant each year and by subsidizing the housing construction our students do. Danatay Jones is a YouthBuild alumnus. She will talk to you about her experience in YouthBuild.
Thank you and good afternoon. My name is Danatay Jones. And I originally dropped out of high school to work to help support my family. My parents had just got a divorce, 188 BILL NO. 000344 which caused us to relocate from Virginia to North Philadelphia. After working, I realized that I needed to go back to school to get my diploma. At YouthBuild I realized that I was a good student and also that I liked the school work. The teachers at YouthBuild make sure that every student keeps up and they also make sure that they show that they care. I believe that everyone should get the same education that I received at YouthBuild. After my June graduation last year, I came back as a full-time AmeriCorps intern, and I have been mentoring the 2000 class of YouthBuild through volunteer work at the Philadelphia Food Bank and with seniors at Gray's Manor. I have also applied to Howard University, where I plan on majoring in communications, and I am still waiting to hear from them. And I want to introduce Angel Rodriguez, our Executive Director.
Thank you very much for your nice testimony. 189 BILL NO. 000344 (Applause.)
Good afternoon, Council Members. My name is Angel Rodriguez, Acting Executive Director of YouthBuild. We would like to thank OHCD and City Council for their support on behalf of the many young men and women in Philadelphia who need a second chance. YouthBuild Philadelphia has been a grantee of the city's Office of Housing and Community Development for seven years now. During this time we have combined housing revitalization with economic and job development initiatives to help low-income people attain and retain jobs. As Taylor mentioned earlier, nearly 500 young adults will have graduated from our program by June, and 95 percent of them will have earned their high school diploma. For the 2000-2001 school year, YouthBuild will enroll another 200 out-of-school youth from a number of districts in the city. OHCD has proposed to continue to support the YouthBuild program for the 2000-2001 190 BILL NO. 000344 year, with operating support of up to a million dollars and development subsidies provided on a project-by-project basis through neighborhood-based home ownership production funds. Unfortunately, this represents a funding cut of $200,000, a gap we will work to fill from other sources so we can maintain the same level of enrollment as last year. These CDBG funds have been vital to us as we work to leverage other funding resources for our program. For the past six years, we have used CDBG funds to leverage federal, state, and private monies, including an increasingly competitive YouthBuild grant from the U.S. Department of Housing and Urban Development. The development subsidies provided through neighborhood-based home ownership production funds last year will be used to allow students in the 2000-2001 class to rebuild 14 abandoned houses in three sections of the city. We are grateful for the support we have received from the city. It has allowed us to address two of the city's most critical issues; 191 BILL NO. 000344 first, undereducated youth and, second, abandoned housing. Our program design provides a way for mobilizing at-risk youth to become a positive work force reversing urban blight. The benefits of our program are tangible and encompass the entire community. We still have to reach the capacity to enroll larger numbers of young adults. Each year we are able to enroll less than a third of the students that apply to our program. Continued support from the city is crucial to us, as we serve increasing numbers of at-risk youth in Philadelphia and continue to rebuild communities one block at a time. Thank you.
I just want to add that I have applications here. So that if anyone knows a young man or a young woman who has dropped out of school.
Yes, we would love to have those applications. Sergeant At Arms, please 192 BILL NO. 000344 get them. Councilman Ortiz.
Yes. Of the 500 graduates -- and I know that some of the work has been done very well and very good, I have seen some of the work that you have done -- but do you have any data as to how many of those 500 graduates have attained a union card in the building trades?
To date, I think we have only one graduate who is a full journeyman in the union, and it's bricklayers. And this --
The majority of the 500 graduates, they are minorities; right?
Almost all of our graduates are minorities. And I have to say that to 30 19 percent of our graduates do pursue work in the 20 construction trades. 21 We found it very difficult to get our 22 graduates into the unions, and then to keep them in 23 the unions. 24 Because we find that they are not 25 able to get steady enough work, once they do get 193 BILL NO. 000344 into union apprenticeship, in order to maintain themselves while they are advancing in the union. And because of their lack of seniority, and whatever else is going on in terms of them getting work, I don't even -- I don't always recommend that they pursue working in the union at this point, because our graduates all need steady work.
Are we listening to this here? Do you hear that? Out of 500 graduates who work and graduate with building trades skills and electricians, bricklayers, out of 500 graduates in the last few years, and they are all minorities, only 1 has obtained their union card. Don't we find that somewhat strange?
I think, Councilman, that maybe if we contacted, we interceded and talked with our union people, maybe we can help them. Because they do a fine job. And I think that maybe that's where we can provide some help.
I should clarify, we have about a dozen who are in apprenticeship level. But in terms of journeyman level, only one has exceeded 194 BILL NO. 000344 that, exceeded apprenticeship.
All the money that we spend in this city, minority kids cannot find jobs in those areas. I think it is about time we started asking some real questions.
Thank you. We are going to have Joanne Jackson, ACDC, and then we are going to have Jeff Ordower and Mary Curry. Thank you very much. You do an excellent job. And thank you again, Ms. Jackson. We tried not to make you wait. Last time I remember you waited about eight hours. So we do try, and we appreciate the work that you do. Again, thank you very much. And after that will be Ed Schwartz. Ed, are you still around? Thank you. Please identify yourself for the record.
I am Joanne Jackson, Executive Director of Advocate Community Development Corporation. Jannie Blackwell, I guess it is a Member of City Council, ACDC is very pleased to be 195 BILL NO. 000344 here today. We support the goals of the plan for Year 25. We are specifically very pleased that two RFPs will be issued in the current year, one for planning and acquisition for home ownership and one for rental housing. We are also pleased that RDA and OHCD will continue the Home Ownership Rehabilitation Program, HRP, and that OHCD is continuing the Home Ownership and Housing Preservation Programs. This year we are looking forward to working with RDA and OHCD on the rehabilitation of seven houses on the north side of the 1600 block of Diamond Street. These are houses that were designed by Frank Furness. We will be working with Friends Rehabilitation, and we think that this will provide a significant improvement to our neighborhood. But in order to do rehabilitation on the scale that we would like to, and to effectively communicate to fight blight in our North Philadelphia neighborhood, we would like to see OHCD and RDA issue housing RFPs on a more regular basis. We are also looking forward to 196 BILL NO. 000344 becoming a part of the HRP. ACDC has not been a part of this program in the past. In the next two weeks we will buy our first house. And we feel that this program has the potential to do much in neighborhoods such as ours where we have many stable blocks that are marred by one or two vacant properties. However, because of the size of many of the houses in our neighborhoods, and because many of them have suffered from fires or have been abandoned for some time, in many cases we have difficulties getting additional money in order to participate with HRP, which was designed for moderate rehabilitation. We would like to see that program we worked. So that these houses on otherwise stable blocks, and may be three stories tall, have had a fire, could also be rehabilitated under this program. We were pleased to see the continuing of the Home Ownership Programs, the weatherization, major repairs, because there is a real need for this in our area. And we are going to work to make this information more available to some people in our 197 BILL NO. 000344 neighborhood with fixed incomes and are older. In addition to the projects that I have mentioned, we are also restoring the rectory at the Church of the Advocate. This will become the offices for not only ACDC, but for Art Sanctuary. We are building a playground for children five years old and younger; we are sponsoring Diamonds for Children 2000, a series of cultural events for children in Diamond Park; and we are developing a plan for the blocks facing Duckery Elementary School. At ACDC we feel that we are working hard to reduce blight and make our neighborhood a more desirable place to live. We are doing this with very little city funds. But we would like to see more comprehensive planning involving City Council Members, city agencies, and CDCs, as we all work together to reduce blight. This wasn't a part of my presentation, but I wanted to address Councilwoman Tasco's comments about the amount of time it takes city to convey properties to nonfor-profit. This is a major problem. 198 BILL NO. 000344 In over our 32-year history it is embarrassing to admit how many times houses that were once slated for rehabilitation had to be demolished because of the time it took our organization to obtain title. Thank you.
Thank you very much, Ms. Jackson. Jeff Ordower and Mary Curry, ACORN. Good afternoon. Please identify yourself for the record and begin your testimony.
My name is Mary Curry, and I live in West Philadelphia. And good afternoon, Councilwoman Blackwell and committee members. I am a member of ACORN and a victim of predatory lending. I own my house outright, but needed a home equity loan for some much-needed repairs. I received an additional loan for UC lending at an 8 percent rate, interest rate, and I made my payments on time. And later on I needed to consolidate some additional debt with UC lending, offering to 199 BILL NO. 000344 refinance my original loan. They refinanced my entire loan at 11.33 percent interest. In addition to that, I now pay for home insurance through my loan, and payments have grown to $519 per month. Thousands of other low income, moderate income people have similar stories to tell on a whole variety of predatory lending practices. My loan payments are almost one half of my total fixed income. My original loan, the first loan that I had, was at 8.9 percent, but is now 11.33 percent. I urge the City Council to support the amendment which will be introduced by Councilwoman Tasco and will restrict some predatory lending practices. While the ordinance may not help my situation, it will help others that may not fall in this predatory lending situation. And I thank you.
My name is Jeff 200 BILL NO. 000344 Ordower, and I am the Office Director of ACORN. And I just wanted to add a couple of facts that have led to the epidemic of high-cost subprime loans, or predatory lending, in Philadelphia that I think are very useful to the committee and to Council. The first fact which points to the epidemic, the increase in predatory and high cost subprime lending, is that in Philadelphia neighborhoods in which minority residents make up more than 50 percent of the population, receive 13 percent of the conventional purchase loans made by 14 only the top ten subprime lenders, the top ten 15 high-cost lenders, compared to only 4 percent of the 16 conventional loans made by all other lenders. 17 In other words, six times more loans 18 were made in communities of color by predatory 19 lenders than conventional loans were made just by 20 the top ten subprime lenders. 21 In addition, low- and moderate-income 22 neighborhoods received a four times greater 23 percentage of conventional loans from the top 24 subprime lenders than from all other lenders. And then we also did a study which 201 BILL NO. 000344 will be released with Councilwoman Blackwell and other members of Council a couple weeks ago focusing on the impact of subprime and predatory lending in one neighborhood in southwest Philadelphia, in the Kingsessing neighborhood. And we found out that between 1992 and 1998, subprime lending in the Kingsessing neighborhood in two census tracks in Southwest Philadelphia had increased by 4,800 percent. In that same time period, foreclosures have increased by 93 percent. Of the foreclosures for which records were available, where we could identify the original lender, 79 percent of those foreclosures came from nonbank lenders; in other words, subprime lenders. We are happy to answer any and all questions about predatory lending and the impact of Councilwoman Tasco's amendment. Thank you very much to the Councilwoman and the Finance Committee for your time.
Thank you very much for your work in this area. It is really, really commendable. 202 BILL NO. 000344 Are there any questions from members of the committee or other members of Council?
I don't have any questions. I just have a statement that points to the fact that the reason we are going to propose the amendments, while it will not help the average citizen, we are trying to focus in on at least the funding that's coming out of the city dollars. Councilwoman Blackwell is working on other initiatives that will hopefully lead us to dealing with all Philadelphians, with ACORN, in terms of Council resolution and other activities. So it is an area that is quite important to all of us. And we have been working with Michelle Lewis, who will testify, who is from the Northwest Housing Counseling Service, on establishing and holding town meetings around the city to educate people about protecting themselves against this kind of thing. So it is an issue that we want the Housing Counseling Services to address and focus in on how we protect city dollars. So thank you very much for your testimony. 203 BILL NO. 000344
Is Ed Schwartz here, Institute for Civic Values? Steve Culbertson, the CDC of Frankford Group Ministry? And next will be Michelle Lewis, about whom the Councilwoman just spoke, to further address the whole issue of predatory lending and counseling. Good afternoon. Thank you for your patience. Please identify yourself for the record and begin.
Good afternoon. My name is Sloane Folks. And in my capacity as the Director of Economic Development for the Community Development Corporation of Frankford Group Ministries, Community Development Block Grant funding has been --
You have to speak into the mike and slow down, please.
I'm sorry. Community 204 BILL NO. 000344 Development Block Grant funding has been an essential tool in the economic development and revitalization of the Frankford community. The division of economic development of the CDC of FGM primarily serves the 19124 zip code areas, Census Track 292 through 302 and 307 through 319, and has benefited greatly from the infusion of Community Development Block Grant funding into our community. CDC FGM's economic development strategies is one components of a holistic approach for community improvement and self-determination that also includes our real estate development, housing counseling, targeted neighborhood initiative, and work force development programs. Our economic developments program has developed a comprehensive strategy to improve the economic vitality of the Frankford community. This approach includes the following: In March 1999, through the Department of Commerce, we received a grant for over $30,000 that has been utilized for both economic developments and work force initiatives. This enabled us to leverage 205 BILL NO. 000344 additional dollars and to begin bringing the work force department to scale. Since then, with this funding, we were able to higher an additional counselor and to upgrade our equipment and to offer services to our youth. This has meant for our clientele and community and increase in responsive services, the ability to address their individual needs on a timely basis, connectedness within the labor market, and the ability to successfully meet our mission of preparing people to thrive in the job market. But mostly it has increased the economic makeup of Frankford and has opened doors for people to a more comfortable life. It also includes a business development and training program which assists new entrepreneurs as well as established businesses in the developments and growth of their enterprises. An SBA loan intermediary status, meaning we assist prospective borrowers in the development of their business plan and loan packaging, was submitted to the SBA for prequalification and the possibility of 206 BILL NO. 000344 SBA-guaranteed loans from lenders. A monthly health start business program, a ten week home daycare training initiative, a national trust for start preservation designated Main Street Program, the Frankford Main Street Program, which is one of only a handful of pilot programs in urban business districts around the country. Frankford Main Street focuses on the revitalization of the business corridor through approving the five-point approach to economic revitalization. These points include organizational development, marketing, promotional activities, design, streetscape implementation, quality of life and economic restructuring for the business corridor. The Frankford Special Services District, which is a privately directed municipal authority, is charged with the responsibility to provide the Frankford Business Corridor with complementary sidewalk sweeping services and safety ambassadors who act as the eyes and ears for the police on Frankford Avenue, as well as providing a 207 BILL NO. 000344 welcoming presence to visitors and shoppers. CDBG funding has allowed each of these initiatives to begin or maintain delivery of services to the Frankford community and has contributed to the following increase in these growth indicators since 1996: A net increase of new businesses, the creation of 230 new permanent jobs in the community, retail vacancy is down from a high of close to 45 percent to less than 20, and private sector investment in the Frankford Avenue Business Corridor is more than $4 million. As has been demonstrated, the use of Community Development Block Grant funding has been a critical stimulus in the economic development and commercial revitalization of the Frankford community, as well as instrumental in the creation of a more livable and enduring community.
I would like to introduce my colleague, Suzanne McQuillan, our Director of Real Estate. MS. SUZANNA McQUILLAN: Good afternoon. My name is Suzanna McQuillan, and I am Director of Real Estate Development for the Community Development Corporation of Frankford Group 208 BILL NO. 000344 Ministry. The CDC works to revitalize the Frankford section of Philadelphia through home ownership development, commercial corridor revitalization, mortgage counseling, and job training and placement. Since 1996, we have rehabilitated 29 abandoned or empty homes and sold them to first-time homeowners earning no more than 80 percent of the median income using the subsidy provide the by the Community Development Block Grant funds. We have 11 more homes in our development pipeline, which will be completed by the end of this year. In addition, we have developed 28 homes using new construction and are in the process of constructing 15 additional new homes. Community Development Block Grant funds were instrumental in the development of our new construction and have provided the grant subsidy for crucial predevelopment and development activities; such as, acquiring land, conducting environmental studies, site clearance, closing costs, and actual construction. 209 BILL NO. 000344 Without the partnership of the Office of Housing and Community Development and the Redevelopment Authority and the CDBG funds that they provide, we would not have been able to develop these 83 homes in the Frankford community and 83 first-time homeowners would not exist in the City of Philadelphia. In 1999, our Mortgage Counseling Department provided home purchase education for over 400 families and placed 290 families in homes. This number translates to over 11 and a half million dollars in mortgages citywide. Through our agency, the city has also assisted 400 families to receive closing cost assistance that is vital for them to purchase their first home. Your endorsement of the Community Development Block Grant and the Year budget is 20 crucial to revitalizing Philadelphia's 21 neighborhoods. We urge you to support this 22 program. 23 Thank you very much for your time. ) 25
Thank you very much. 210 BILL NO. 000344 Michelle Lewis, Northwest Counseling Service. Sorry for the delay. I see your request to testify at 10:30. It is a little later than that. We tried.
Dennis Murphy, he is next, Homeownership Counseling Association. Thank you.
In fact, Madam Chairwoman, I'd like for Denis Murphy to join me, to testify immediately after me, and Khalil Walker from the Housing Association of Delaware Valley, as we are all part of a coalition of housing counseling agencies. So we felt we would save you time, too.
My name is Michelle Lewis, and I am President and Chief Executive Officer for Northwest Counseling Service. Northwest Counseling Service provides real estate and housing counseling services. And we have built our backbone around providing those services for the last 18 years in the areas of pre 211 BILL NO. 000344 and post purchase, pre and post rental, reverse mortgage counseling, mortgage delinquency and default, and housing consumer education among some other things that we do as what's known as a superagency. As you know, and we have talked about in the past, the City of Philadelphia is leading the charge around the country in terms of meeting that home ownership goal that President Clinton had at 67.5 percent. And I think that we have long past that, and so we need to all pat ourselves on the back at what we have done in Philadelphia to create home ownership. And that's been the focus for the last eight years in the City of Philadelphia. And why I think that it has been well worth it, because it has increased the city's tax base and a whole host of other benefits have come with home ownership. But it doesn't stop there. There is no question that we need to do more. We need to, as Councilman Nutter mentioned earlier, we need to do more with existing homeowners. 212 BILL NO. 000344 We need to help homeowners get through the maze of refinancing, seniors with reverse mortgages, home improvement, and those sorts of things. There is no question that I think we have to place a lot more emphasis on that. And I think that the counseling agencies do everything that we can in this area, but we probably need to spend some more time doing that. And also the Councilman mentioned services to the people that meet an income guideline that's -- the federal guidelines, and even above going into middle income. I do want to mention that there are some restrictions in the CDBG budget which restrict counseling agencies from providing services beyond the limits in terms of those income guidelines. But those of us that are HUD certified, and that's a certification that is provided through HUD, are required to service anyone that walks in the door regardless of net worth. And we do that on a day-to-day basis, all year-round, so that people technically that could be worth $2 billion could come into the office 213 BILL NO. 000344 and get services, and we do provide those services. We don't regularly get people that have a net worth of 2 billion, you understand. And we don't necessarily --
And we don't necessarily encourage it because they can do more for us than we can probably ever do for them. But, nevertheless, we do provide those services. There are a couple of concerns that I have. At Northwest Counseling Service, we have been studying over the last eight years the delinquency levels for some of the loans that have happened. And we have been studying in particular those that we consider early defaults, people that fall behind prior to -- or within a year after closing on a loan. And the figures are startling. They are up as high as about percent at this time, at 21 least in the studies that we have done. 22 Now, that takes into account the 23 roughly 5,000 people that we get in our office on an 24 average basis each year. But, nevertheless, it is a 25 huge figure. 214 BILL NO. 000344 We had done another study back in 1995 and '96 which told us that even though we had had, of the loans that we looked at that had come through our office, we had a less than 2 percent denial rate in terms of people getting mortgages. Which on its surface we all said, "This is absolutely wonderful. " On the other hand, we saw that 11 percent of those people were people that the 12 counselors didn't necessarily think were ready at 13 that time. 14 And what that meant was that we 15 weren't saying not to buy, but we were saying maybe 16 wait a little longer, save a little more, or buy a 17 little less. 18 However, our hands were somewhat tied 19 because many of these people still got loans from 20 what ACORN talked about earlier, and which has been 21 a major concern for us, and that is predatory 22 lenders that have been plaguing our communities. 23 And this has become a phenomenon that's just huge. 24 And we, in the last couple of months, we teamed up with Councilwoman Tasco, who really was 215 BILL NO. 000344 leading the charge in this area in terms of fraud prevention, which includes predatory lending scams in connection with reverse mortgages, and all kinds of other predatory acts that are happening in our communities. While we took that show on the road in combination with HUD and the City of Philadelphia, to really go around and educate people in the neighborhoods about these practices and what's been happening, and we gained support from many of the -- from the Council Members around the city, Councilwoman Blackwell in particular supported us in an effort over in West Philadelphia that was, in fact, one of our largest groups. And we were targeting seniors only because seniors are a big target of this. But we're not stopping there. We are going to do this with all consumers all over the city. And we have plans to do just a number of these, as Councilwoman Tasco had said. And I absolutely want to be the forefront in supporting the efforts of both Councilwoman Blackwell and Councilwoman Tasco in their efforts to prevent this. 216 BILL NO. 000344 One other thing before I get too long-winded, because I want my colleagues to be able to have some words. While we saw an increase in the number of delinquencies that happened around the city, the other thing that -- there actually was a decrease in the number of delinquencies that were attributable to home repairs. And that's been a significant -- a good thing. We have seen a decrease there. Where prior to that I would say about 72 percent of early defaults came as a result of people getting in the homes where there were repairs necessary. And those repairs by and large created them -- a delinquency which made them fall behind in their mortgages. We have seen a decrease in that. And I think that a big part of that decrease can be attributable to the city's settlement assistance grant program, when it added on the inspection component. And I know that it drove the numbers down in terms of the numbers of people that we have been able to help through the program. But obviously it is helping on the other end in terms of 217 BILL NO.
000344 keeping people stable and maintaining home ownership. And so that's a program that we also support continuing. That is facing a threat at this time due to the HUD regulations regarding the lead-based paint requirements that HUD has imposed, which maybe my colleagues can talk about a little bit more. There are a lot more adept at that whole side of things that I am, but I do want to mention that. One last thing. I said one last thing a few minutes ago, didn't I? All right. This is last. The counseling agencies really provide the backbone of maintaining these neighborhoods. We help to financially stabilize residents one by one, which create a macro effect in the city that can lead to financial stability among the neighborhoods and ultimately the health and welfare of the City of Philadelphia. Let us continue to do that. There is a nationwide effort. I sit on a board called the American Homeowner Education and Counseling Institute, of which I am very proud 218 BILL NO. 000344 to be a member of that Board, because the Board is made up of companies that are larger than life, some of the largest companies in the world. Some of these companies pay $140,000 a quarter to sit on this Board. You know they don't have me there for my money. And their effort is to create a nationwide curriculum and certification process for counselors all over the country, and this is a very aggressive effort which I support in general. However, there is one component of it that I am not necessarily in favor of, and that is that the certification process allows lenders and allows real estate agents and others to provide real estate and housing counseling to consumers, while practicing what they do. My thing is, I don't have a problem with the person holding themselves out to be anything in the world. I myself am a real estate broker. But I think when I made the decision to practice in the area of housing counseling, I decided that I couldn't find a way that I could do this without a conflict. 219 BILL NO. 000344 And I am just very concerned that if we don't continue to fund the counseling agencies at this level, the grass-root level, the nonprofits that provide this, we are going to be overwhelmed. They are already overwhelming us in money, but we will be overwhelmed in the community by people that are providing advice and information to people, and these are the same people that are providing these predatory loans. I just have a real concern about that. And I just want to end by saying, that's why I absolutely support keeping the housing counseling dollars, at minimum, at the level that they are, continuing to fund the Settlement Grant Assistance Program. And I am done. Thank you so much. )
Mr. Murphy, Denis Murphy, Homeownership Counseling Association. Do you have something to add?
So thank you for giving us this opportunity to testify today. And also accommodating our request to testify together.
My name is Denis Murphy. I am the Board President of the Homeownership Counseling Association, or HCA. HCA is made up of nonprofit 6 agencies in the five-county area. 14 of these 7 agencies are funded by OHCD to provide housing 8 counseling. 9 In addition to serving on the Board 10 of HCA, I work every day as a housing counselor in 11 South Philadelphia for United Communities. 12 So the question would be, what is 13 housing counseling and why does it make sense for 14 the city to continue to invest in counseling in the 15 way that it has been done in the past? 16 At my home agency, United 17 Communities, we help 90 to 100 families every year 18 buy a home. 19 Those who participate in our program 20 come from all different backgrounds, both 21 economically and ethnically. And they are all 22 united by one thing, which they really want to buy a house. For us counseling means working with these families over time so that they can become 221 BILL NO. 000344 homeowners and hopefully so they can use home ownership to get ahead. Most of those who come to us for the home buyer programs couldn't qualify for a mortgage and aren't ready. We sit with these families and help them do the detailed work of establishing the track record that a lender would require for them to get a mortgage. For many of us our buyers this means paying off bad credit from the past, building a good credit history, and saving money. None of this is easy. And many of those who have bought homes through our program would tell you they couldn't have do done it without the assistance of housing counseling. And I am very proud to say that earlier today there were many home buyer families who came in at 10 o'clock that you may have noticed. So that's very impressive to me as a housing counselor, that they see our valuable our work is. And, also, we had -- for National 222 BILL NO. 000344 Home Ownership Week, we were giving out fliers. And it was great for me to see many of my old clients who were walking through City Hall courtyard saying how important it is the work that we do. Counseling, however, is much more than just getting people a mortgage. Many of our buyers don't even know that sales prices are negotiable or they don't understand that the buyer has to check out the house ahead of time and inspect it for problems. The realtors and the mortgage lenders that buyers interact with often don't have the time to educate buyers and they often are commissioned salespeople. The counselor often is the only person able to provide valuable objective information. And I want to echo Michelle's comments talking about the program she was referring to, and how I think the quality of the work that we do as counselors is much different than that of people in the private sector because we are very much pro consumer. And that also has a real impact as 223 BILL NO. 000344 far as the predatory lending goes. And I am going to mention that later. Home ownership is a powerful motivator. And when families successfully complete counseling, they often make changes and pick up skills that make them more likely to succeed. " So that's kind of our goal as counselors, is to really get people to take ownership of that big life decision of buying a house. Unlike the realtor or the lender, it is our job to work with buyers so that they see their decision to buy a home in terms of larger goals. Many of us also provide counseling to homeowners in danger of losing their homes in foreclosure. For most families who experience a serious financial crisis, it would be impossible for them to successfully negotiate a workout plan with 224 BILL NO. 000344 their lender without the help of their counselor. Counselors assist homeowners in applying for emergency mortgage assistance and they work with lenders and homeowners to work out repayment plans. This work is extremely demanding and time consuming.
With the great successes that we have had here in Philadelphia promoting home ownership, it is critical that we fund counseling so that a counselor will be there for those homeowners who happen to get into trouble. Housing counseling touches virtually every neighborhood of the city and it reaches a huge range of people with a wide range of incomes. As Michelle mentioned, many of us do see middle-income buyers. And the great thing is that the support that OHCD has given us allows us to have the core staff who are funded to provide counseling. And then when those middle-income people come through the door, we are there to point them in the right direction, too. So one thing I noticed is, in the city's plan and also in the city's publications, 225 BILL NO. 000344 they talk about numbers for the Settlement Assistance Program. And I think the numbers in terms of families affected by counseling is even greater because many of our buyers don't receive the grant. Many of our buyers are over income or for other reasons may not receive that grant. So although the category of housing counseling may sound vague, the results of counseling are very tangible and widespread. Since the against of the Settlement Assistance Program, over 10,000 families have received assistance from the city towards closing costs. Even more important is what Michelle had mentioned, which is the way that housing counseling has helped her revive the sales market in many neighborhoods by bringing home ownership to new groups of people and it has helped bring new mortgage lenders to the table. So when dollars are scarce, why does it make sense for the city to continue to fund housing counseling at current levels? Counseling is -- the first reason is, 226 BILL NO. 000344 counseling is extremely cost effective. For example, for 120,000 the city is able to fund a counseling program in South Philadelphia that reaches roughly 400 families and results in 90 to 100 new homeowners per year. Other counseling that helps families avoid foreclosure helps the city save potential costs if the property were to remain vacant. Another why reason it is wise to support counseling is, OHCD's support of housing counseling leverages settlement assistance dollars from noncity sources of grant money, such as the state and the Federal Home Loan Bank, and it leverages a huge amount of private mortgage dollars. Community groups that provide counseling have collabaorated with mortgage lenders and then also with insurance companies to get them to bring their dollars into our neighborhoods, too. Counseling can play a key role in fighting blight. As we know, Philadelphia has an aging homeowner population, and counseling is key for readying the young people of the city to move into their places and to buy homes. Homeowners 227 BILL NO. 000344 provide tax revenue for the city. Counseling also promotes other programs that provide incentives for people to buy in the city, rather than moving to the suburbs. So we worked with a lot of lenders that have targeted programs that reward for people investing in the city. Housing counseling puts home ownership within reach for groups with special needs; such as, disabled people and people who speak English as a second language and might have a more difficult time buying a home. And then, lastly, I would like to re-emphasize the point of strong housing counseling promotes a more consumer protective environment in neighborhoods. And that's going to be key in the future to fighting predatory lending, as we have an established network of counseling agencies with capacity to work with home buyers and with homeowners who have a very pro consumer orientation. And for many of us on the pre-purchase end, we are the strongest force in 228 BILL NO. 000344 neighborhoods for bringing in low-interest-rate mortgage programs. So I would like to echo Michelle's points and also ACORN's points. So thank you for giving me the opportunity to testify today.
And please show your commitment to home ownership for Philadelphians by preserving the level of funding for counseling in Year 26. Thank you.
Just before you start, I just have a question. Michelle mentioned and you have mentioned the fact that you have counseled people who don't qualify under the income guideline. Can't you charge them a sliding fee? Can't you charge a fee for counseling?
That actually is something that we have talked about a lot. And I think that that's something that we might have to clarify with OHCD. At our agency, we have actually counseled those people for free. And then I guess 229 BILL NO. 000344 their work has been -- in a sense, some of these people have been paid for by the private support we get from lenders. But that's a good question. And I think that agencies would probably need to address that with OHCD.
May I answer that for a second? There is also a restriction that is actually somewhat vague that is regarding the HUD certification, and that --
Yes. The HUD certification, those of us that are HUD certified, are required not to charge a fee. Now, there is some discussion in Washington right now about revising that. But at this point, those of us that are HUD certified are not really allowed to charge a fee directly for the counseling service.
That's a political question. All you have to do is talk to your local Congressman, they will just change the 230 BILL NO. 000344 rules right away.
Good afternoon, Council Chair Blackwell and Councilwoman Tasco. My name is Khalil Walker, and I am the Program Director of the Housing Association Information Program. The Housing Association Information Program is the direct services counseling subsidiary of the Housing Association of Delaware Valley, Anthony Lewis, Managing Director. HADV -- and this is where I throw in our acronyms. Please stop me. If I talk housing jargon, feel free to ask me to clarify. HADV is the oldest housing advocacy organization in the country, founded in 1909 with the -- born on the premise of eliminating racism and discrimination in the field of housing for all individuals. Currently, in terms of publications 231 BILL NO. 000344 and activities that we are doing at the Housing Association of Delaware Valley, we have the region's only housing magazine, In Phil Magazine, which takes on a wide array of topics relative to housing and analyzing market trends and dynamics. HADV also has helped public housing tenants nationwide to become managers of their developments, as well as with Southwark become the first in the nation to be owners of their development. Southwark, in conjunction with public/private organizations, are owners of their development. But I am area here today to talk about housing counseling, and that's my baby. Like Michelle and Denis said, all of the above. I mean, those are really tough acts to follow. Some issues that I would like to talk about are, I would like to pose a question to the Chair. And that is, how many working poor and fixed-income individuals can afford a three- to four-bedroom apartment in the City of Philadelphia? Well, I will answer it for you. None. 232 BILL NO. 000344 If you take a minimum-wage-earning family that may have transitioned off Welfare by way of Welfare to Work, or just a hard-working family that does not have the benefits of skills and education to compete in this high-tech world that we live in, they're often faced with making decisions relative to housing. They cannot afford to have a three- or four-bedroom apartment to rent. So, as a result, they have to make decisions that affect their quality of life; decisions like two, three, or four jobs. And we have clients that we can document that work many, many jobs just to stay afloat. These families are often on the brink of homelessness. They have to sometimes forego eating nutritional food to pay the rent. And that increasingly, with the housing market doing well by all -- in all sectors, housing rents in Philadelphia are going up. The corresponding wages are not keeping up with the rents, which is forcing our clients to come up with more and more innovative ways to just maintain their households. Well, this is where housing consumer 233 BILL NO. 000344 education component comes in that the housing counseling organizations provide. We look at the wide human services network, we look at the employment training opportunities, we look at available employment activities, and we help our clients with budget counseling so that they can stay in their homes, help stabilizing their families, and help stabilizing the communities, a very important issue in terms of our low and very low income renters in the City of Philadelphia. Also in terms of consumer education, my colleagues did talk very much about predatory lending. Well, I would like to say, with the proper use of consumer education, not only can we system the tide of rising predatory lending practices, but we can also talk to our lending community and ensure that urban contemporary lending practices come out of these kind of situations, so that we can prevent predatory lending and squash it where it exists. Working in conjunction with Council and state legislators, we can come up with a 234 BILL NO. 000344 standard procedure where we can hold these lenders accountable for their actions and monitor our communities so that we make sure that the viability of our communities are there.
And, finally, I would like to say that your help is desperately needed in maintaining the funding for housing counseling. While I can clearly demonstrate, as my colleagues, a need for increased funding, certainly we should at least be funded at the current levels because we are doing everything with nothing. Thank you very much. And this concludes my testimony. )
Thank you very much. I thank everyone for their patience. And after Councilwoman Tasco's remarks, we are going to break for an hour.
I just heard you talk about maintaining the funding level. Are you scheduled to be cut?
We hope not, knock on wood. 235 BILL NO. 000344 But in the budget, your funds are there for your program; right?
Yes. Yes, Councilwoman. And from what I understand, the markup at the federal level, there may be a possible cut of about 295 million. A VOICE: That's next year.
Absolutely. And we are talking about Year 26, which is what we are trying to address here. The states were preserved at their current levels. And given the need, the increasing need -- because the clients that we see are not enjoying the prosperity to the degree that the other sectors of the community are.
Their lobbying side is strong in the private sector. So you all would have to lobby your federal representatives stronger for the dollars not to be cut, and join other national organizations which are lobbying to prevent the cuts in the Community Development Block Grant. I know national League of Cities is 236 BILL NO. 000344 working very hard to fight the proposed cuts in the funding.
We are sorry for the delay. We will continue so that we can get you in and out before it storms again. For all those Councilpersons who are in their offices, the Finance hearing on the Community Development Block Grant application is continued. Is Dennis Pollard here? Dennis Pollard. Blaine Bonham? Thank you. And while you are coming forward, I would note that Greater Philadelphia Urban Affairs Coalition left their testimony; Ms. Hersch was here also; Charles Reeves and the Committee of Concerned Citizens for Grays Ferry; Kevin Spicer, same organization; and Neysa Williams, same organization, that is Committee of Concerned Citizens Grays Ferry. 237 BILL NO. 000344 We promised them that their testimony would be considered as if they had read it in person. So those persons have had to leave. Thank you. Please identify yourself for the record and present your testimony.
My name is Bitrai Roy, and I am with the Pennsylvania Horticultural Society's Philadelphia Green Program. And I am here on behalf of Blaine Bonham, who could not be here regrettably. Good afternoon, Madam Chair. Philadelphia Green has been a budget item in the city's Year application to HUD. This is 15 specifically for Philadelphia Green. 16 This CDBG funding that we receive 17 from OHCD provides us with the ability to leverage 18 city funding to attract a wide range of public and 19 private support. 20 With significant grants from local 21 and national funders, we have been able to leverage 22 this funding, as well as along with proceeds from 23 the Society's Philadelphia Flower Show. 24 We have accomplished much throughout 25 the city, especially in low- and moderate-income 238 BILL NO. 000344 neighborhoods. Over the past year, Philadelphia Green helped develop over new greening projects 5 across the city, as well as provided assistance to 6 nearly over 200 existing sites. 7 Through our training programs, we 8 reach a wide range of city residents. One such 9 example is our Tree Tenders For Teachers. Through 10 this training initiative, Philadelphia-based 11 educators are trained in horticultural and develop 12 lesson plans that help their students beautify and 13 improve their neighborhoods. 14 The School District of Philadelphia 15 has embraced the Tree Tenders Teachers concept as a part of its mandated community-based service learning projects. Since the program began in 1998, nearly 200 teachers have been trained, reaching over 5,600 students. Our work with the city's neighborhood parks is now a citywide support system for friends groups. In the past two years, the project has expanded to include 24 parks throughout the 239 BILL NO. 000344 city. Our work at parks such as Carroll Park, Gorgas Park, Vernon Park, and Malcolm X have helped these groups clean, green, arrange programming, attract city and community investments, and increase userships of their parks. Philadelphia Green continues its targeted neighborhood greening efforts, working with CDCs, such as Frankford Group Ministries, Association of Puerto Ricans on the March, Greater Germantown Housing Development Corporation, and New Kensington CDC. OHCD has been the main funder of our work with New Kensington to create and implement a vacant land management program in the New Kensington community. To date, the program has affected over 540, or about 50 percent, of the neighborhood's unmanaged vacant lots. With involvement of public and private stakeholders, Philadelphia Green undertook a comprehensive vacant land management study which was completed in April of this year. This study makes recommendations for 240 BILL NO. 000344 the adoption of a realistic, cost-effective system through which all of the city's vacant land is maintained until appropriate long-term uses for each parcel is found. The findings of the study were incorporated into the Blight Elimination Subcommittee's report on urban blight to the new Administration. Philadelphia Green proposes to continue this work with city government, community-based organizations, and other stakeholders to develop this management system both at the city and at the neighborhood levels. This funding that we receive from OHCD is crucial to our continued success in greening Philadelphia's neighborhoods, and we ask that you support this allocation. On behalf of PHS and its Philadelphia Green Program, I would like to thank Council for your past and continued support of our greening initiatives.
Thank you very much. Thank you. Thank you for your testimony. Susan Klein, Director of Housing, 241 BILL NO. 000344 Philadelphia Corporation of Aging. Vivian Van Story, Community Land Trust. While they are coming forward, let me note that Sandy Salzman, New Kensington, also left her testimony, and it will be considered as if it were read here in person into the record. Good afternoon. Thank you for your patience. Community Land Trust Corp. Thank you. Please identify yourself for the record.
Good evening, esteemed Council Members. My name is Vivian Van Story, and I am Executive Director of Community Land Trust Corporation. I have served the organization in my North Central Philadelphia neighborhood, which is bound on the north by Cecil B. Moore neighborhood and on the south by Francisville Community. For more than ten years, I have become -- I have come before you today to seek your assistance in helping to ensure the long-term visibility of my neighborhood by assisting us with acquisition and rehabilitation of vacant lots and abandoned properties within the community. 242 BILL NO. 000344 It is our goal to rehabilitate these properties so that they can provide home ownership opportunities for working families. Currently the value in the area are significantly below those in surrounding areas. With financial assistance from the city, we can begin to make steps over the next five years that will lead to increase in property value by lending to increase private secular investments in the area. There are about 100 houses in my neighborhood that I would like to preserve and rerenovate over the next five years. Unless these homes are rerenovated, they will become cancer in an area and help to destabilize the area and further reduce property value and sale prices. We would like to start with the renovation of eight vacant properties in the area. Renovations of these strategically located properties, 1828, 1830, 1832 Girard Avenue, 1800, 1809, 1812, 1840, and 1842 Master Street, would serve as a catalyst to help soar other development in the area and supplement the work that the city 243 BILL NO. 000344 has supported in other plans to support in nearby communities. The Office of Housing and Community Development proposes a continuing home ownership development in the lower North Philadelphia area as a part of Homes in North Philadelphia initiatives. Rerenovation of eight above-mentioned properties, coupled with preservation and upkeep of open space, which has been long over -- which has long been our forte would not only help to stem the tides of abandonment in the area. In addition to helping to stem the tides of abandonment, would also support the important work that begun -- is being done by the city in the home ownership zone in Cecil B. Moore area which immediately abuts my neighborhood. Renovation of vacant homes in my neighborhood is critical, in that it would also help to supplement the second phase of the home ownership zone with -- which will include sites on Bouvier, Master, Montgomery Avenue, and the west of the sink Ironwork site, from 19th to 20th Street on Harlan to Sharswood, Jefferson Street. It would also help to support Poplar 244 BILL NO. 000344 Nehemiah venture in the Master Street Year 2000 development. Thus, as you see, the activities that I am proposing to undertake presently is logical extension of the work that the city has already initiated in previous years, as well as the work it proposes to undertake in the Year consolidated 9 plan. 10 The area abound by Master on the 11 north, 20th on the west, Girard and the south, and 12 Broad on the east is critical to the success of the 13 city's revitalization efforts in the Lower North 14 Philadelphia. 15 With minimal financings and technical 16 assistance, my organization stands ready to 17 undertake much-needed preservation work in the 18 area. 19 I would like to introduce Evelyn 20 Feeney, our Office Manager. Thank you. 21
My name is Evelyn 24 Feeney. I am office manager as well as a resident 25 in the community for over 30 years, and a six-year 245 BILL NO. 000344 block captain. During Year 26, we are requesting funds for redevelopment and development activities so that we can acquire the first eight critical buildings and begin their modernization. Additionally, we are requesting funds during Year so that we can develop a 9 comprehensive neighborhood revitalization plan that 10 would enable us to undertake the following planning 11 activities that would lead to a more large-scale 12 revitalization initiative: Establish a current 13 database for information related to the housing 14 stock, demographics, land use, economic and human 15 services needs of residents of the target area on 16 which to base the master plan activities; create a 17 vehicle of effective participation by neighborhood 18 stakeholders in a development implementation of a 19 shared vision for the neighborhood; create a 20 blueprint for action in the form of a five-year 21 comprehensive revitalization strategy which 22 addresses the physical, economical and social needs 23 of the community; develop a project of the financial 24 costs and component of implementation plan and a 25 strategy for raising necessary private and public 246 BILL NO. 000344 capitals over a multi-year and multi-phase implementation period; create a document that would articulate the visions and strategies so as to form the basis of a campaign to secure the necessary political and financial support to launch the redevelopment efforts; conduct a market study of the area to determine needs for various services; conduct an assessment of the abilities of supportive services in the area; to develop a comprehensive community and supportive services program to address these needs; acquire through negotiation purchases art in conjunction with the City of Philadelphia eminent domain, donor-taker, sheriff's sales, vacant property Review Committee; undertake any environment reviews required to implement a specific development project; identify potential investors for participation in the financing of specific projects; and prepare applications for financing as needed to ensure that the adequate funding is available for each designated project. I would to thank you for this opportunity to speak with you today. And I look forward to working with you to improve the lives of the residents in our neighborhood. 247 BILL NO. 000344
Thank you very much. Rick Sauer, Philadelphia Association of CDCs. Theresa Youngblood, Northern Liberties Neighborhood Association. Nora Lichtash, Women's Community Revitalization Project. Mary Francis Davis, Greater Philadelphia Urban Affairs Coalition, they left their testimony. Farah Jiminez, Mount Airy USA. Ernestine McCall, Grandparents As Parents. Is there anyone else who would like to testify and whose name I have not called? Because that is the last person on our list for today. Good afternoon. Thank you for your patience. Again, we are sorry to have held everyone up.
Good afternoon. I am representing Ernestine McCall, who couldn't be here because of illness in her family. Ernestine McCall is the Director of GAP, which is an acronym for Grandparents As 248 BILL NO. 000344 Parents. I am Eileen Brown, her Assistant Director/President. So it reads a little different than the paper the. She is a grandparent raising six grandchildren, and I am also. First of all, GAP is a nonprofit community-based organization founded over four years ago. Across the United States, in every neighborhood of the city, thousands of grandparents live with and raise their grandchildren. You probably know family members or friends who do the same. We are white, Hispanic, black, Asian, rich, and poor, though GAP members mostly are poor. We are usually very good at what we do. We save the city, state, United States government, lots of money which may have been spent on foster care, social service agencies, homeless shelters, and in many other ways by taking our grandchildren in. In fact, the little research done on us shows that our grandchildren fair very well compared to the alternative. 249 BILL NO. 000344 So every day we juggle the challenge of getting old with the challenge of raising young people, usually on very little money. However, because of our grandchildren, we are not allowed in HUD-funded housing for the elderly. Because of our age, on the other hand, we are not likely to qualify for a mortgage for a house big enough to hold us and our kids. Sometimes we get thrown out of our one-bedroom apartments because they can't accommodate our kids. So I am here today to request that funding be set aside to help us develop housing for the thousands of other grandparent-led families. We have been working with Councilman Darrell Clarke and Jeanette Mentz of OHCD who have been very supportive. We have also been supported greatly by Senator Shirley Kitchen, Legislator Roseitta Youngblood, and also Legislator Andrew Carne. We have submitted a proposal to OHCD for a small start-up grant to build our capacity and help us find out where poor grandparent-led families 250 BILL NO. 000344 are in the city and what type of housing and services they need. We are working with the firm of Diamond and Associates/OMG, and the firm has recently won a grant from the William Penn Foundation to help us. This is the end of the speech that you have up there. But I passionately want the City Council to understand that even though we have the Association for the Aging and we have other things for the aging, this is another issue. This is a phenomenon that is like a growing silent cancer, that is going all through our country. There is over 4 million grandparents raising grandchildren according to the census. For for every one that they know that's raising a grandchild, there are probably ten that will not let theirselves be known. And in this office of GAP, we started out as a support group, but we also ending up advocating for the rights of grandparents. We have many people that come to us that have had to leave the buildings that are made 251 BILL NO. 000344 where elderly people can go and retire because there is no room for their families. In all this new development going on and housing going on in Philadelphia and senior citizen complexes, everything is for first-time home buyers. There is no room for grandparents and grandchildren. And we are on a limited income, and it is not sufficient enough to do what we need to do. So this type of building will be very important to the community, will be very important to grandparents and children at-large. And our motto is to help a child keep a child. So once again I thank you for hearing what is said, and I hope you keep us in mind. That this building, or building of this nature, is very necessary. And we are in -- we are located in the Church of the Advocate. We are in North Central Philadelphia.
But, once again, this is not a North Central problem; this is a problem that's getting to be, actually, nationwide. And we are pretty sure 252 BILL NO. 000344 that Philadelphia can step up to the bat and make a change. Thank you.
Thank you very much. Again, is there anyone else here to testify? We are now asking all Councilpersons who are on this committee if they would return to chambers for a vote. We finished our testimony and we are ready to move on and vote this out of committee. (Short recess.)
Let me thank everyone for coming back to the chambers. And we wanted to conclude our hearings; however, there are some questions about various issues. Let me ask Mr. Kromer if he would come forward, and ask other members of the committee, if you have any questions, what we will do is continue this hearing until tomorrow morning at 9 o'clock. But we want to give both sides an opportunity to know what information is requested, 253 BILL NO. 000344 so that when Mr. Kromer comes back, he will have the information you need. So at this point we want to certainly open the floor for further questions. Councilman Nutter was right here and he said he had spoken with Councilman Kenney, they were not prepared to vote yet because they wanted additional information, I suppose, to questions raised earlier. And would you like to raise any other questions now, so that they can prepare for tomorrow, Councilman Nutter?
And I don't know to what extent this may or may not have been covered this afternoon. What does OHCD do to protect people from predatory loan companies?
Do they accept any responsibility at all? 254 BILL NO. 000344
OHCD's primary activity to prevent consumers against predatory lenders is the Housing Counseling Program, which is staffed by trained counselors who have received specialized training on the issue of predatory lending. So that's our best defense against predatory lending. And I think it is a very important defense now at a time when that issue is clearly a concern and a problem in Philadelphia and elsewhere.
Well, I guess it is clearly a concern because apparently it has not been as effective. I'm sure the counselors do everything they can do, but apparently something more is needed.
Do you police? What happens if a complaint is brought to you that somebody has been victimized by a predatory loan?
Well, there are authorities to whom those complaints are referred. And there are two such complaints 255 BILL NO. 000344 that I received last week, in fact, that I have asked the Law Department to look into and refer to the appropriate authorities. I don't know of any instance in which an individual or a family counseled through our program ended up being victimized by a predatory lender. Certainly if I did hear a complaint along those lines, I would see to it that the complaint was addressed.
Well, we don't know what being "addressed" means. Apparently there is, I understand, substantial evidence that numbers of people are being victimized, and very frequently the victims never complain because of circumstances.
I don't know of a single instance in which an individual or a family counseled through our program, which has served thousands of consumers, has been victimized by a predatory lender. And I think that's an indication of how effective the counseling programs are.
If you knew of a 256 BILL NO. 000344 company that was engaged in the practice of predatory loans, would you be able to bar that company from doing that?
We do more than that. We follow up with the Law Department and the District Attorney.
Well, that doesn't necessarily mean anything, because then they have to make judgments.
And prosecutors have prosecutorial rights to make a determination whether this is the kind of case, you know, that takes up their time, you know, or shouldn't because of pressure of other business.
It potentially has a little more teeth by a potential disbarment by the city's housing agency. We would do that, as well. First and foremost we would report to the authorities for followup.
Okay. I'm not saying okay. I'm saying okay meaning I am ending the question at this point. 257 BILL NO. 000344 I just wanted to raise that because I think there is a very severe and serious problem out there to which this amendment addresses, I think, quite effectively.
To what extent do the counseling agencies monitor or, I guess, investigate the lending sources on these mortgages?
They evaluate lending sources and the terms of financing in every instance. And they advise consumers about the pros and cons of each mortgage lending opportunity that can be considered.
So if someone is going to -- do the counseling services walk them through the mortgage process?
Well, you know, we are going to make some proposals in terms of at least doing something in the city. Because we don't control the interest rate that these companies charge; that is a federal and state issue. 258 BILL NO. 000344 But certainly we have some responsibility to protect people who we work with and who receive city funding, to give them some assurance that they are not going to be duped in the process.
Well, let me make two points, if I could. Number one, I know of no instance in which any counselor funded through our program has failed to protect a consumer from a predatory lender. Secondly, I read the amendment just briefly, and others who know more than I will need to do that. But if this amendment becomes part of our plan, I will guarantee you that administrative costs will increase. Because we currently do not have the staffing for the very detailed monitoring process that's called for here. Now, if we are being asked to monitor and develop a monitoring plan, we would like to do that, in concert with the agencies that have recommended it and with our other housing counseling agencies. 259 BILL NO. 000344 But if we are to be legislatively locked into this approach, I guarantee you administrative costs will go up substantially. And I'm not sure that we can fulfill the intent of the amendment in any case.
Well, you have until we come back tomorrow. I think you ought to sit down with the agencies who have sought to meet with your organization for some time to work through this process.
Let me be clear. I have been very open and very collaborative with the housing counseling agencies. I have met with them on two occasions this year to talk about the Year program. 18 And this issue has not been raised by 19 ACORN. This proposal was not sent to me in 20 advance. The ACORN organization -- 21
Well, we just 22 got it ourselves yesterday. Our technical staff 23 worked on it in City Council. 24
Well, I can tell you, if 25 we are going to be collaborative, we have got to be 260 BILL NO. 000344 serious about collaboration. And I am going to have to meet not only with ACORN, but with the other counseling agencies whose working lives would be influenced by this. I'm not going to agree to a proposal that one group has prepared without consulting anyone else. If we're talking collaboration we're going to have to get together and scrutinize this and discuss it and report back to you on the results of that. And that's what I commit to do. But it will not be done tonight, and it will not be completed by tomorrow morning. And I am not responsible for the fact that that cannot be accomplished by tomorrow morning. The people who put together this proposal, without notifying me and without notifying the other counseling agencies who would be affected by it, have that responsibility. We will work with you and with other Council members and with ACORN and with counseling agencies in good faith. But we expect that good faith to be returned by those who support this 261 BILL NO. 000344 proposal.
Well, just let me say this for the record, that the amendments have been prepared by the technical staff at my request. And Council can always amend an ordinance based on how it feels that the ordinance 8 should go. And sometimes we are able to collaborate and sometimes we are not able to collaborate.
So what we would like for you to do is look at this, and we will ask the Law Department to review it, and we will take it from there. And we don't have to pass on this budget tomorrow, either.
We can take the time to have you collaborate with your counseling services and come back with your recommendation.
Thank you, Madam Chair. 262 BILL NO. 000344 Mr. Kromer, for the purposes of trying to move through this process -- and I am also trying to be as cooperative as possible -- but I would like to get direct information and answers to these information requests prior to voting on the CD Year plan and budget. 8 The first is, as I asked for earlier 9 today, I would like a listing by your office 10 breaking out the Year 26 plan in accordance with the 11 eligibility criteria as laid out in the Code of 12 Federal Regulations related to CDBG program. 13 I would like to see how your budget 14 matches up with the individual categories, and what 15 the projects are, and how much they cost, and where 16 are they located. 17 In accordance with that, we had 18 discussion earlier today, and I would like your 19 response and your proposal to the issue of the 20 equitable or more level funding across the city and 21 across districts in a total fashion, not necessarily 22 program by program. 23 But when you get to the final column, 24 and it says this is all the money, I'd like to see 25 how the $69 million is spent across the city, and 263 BILL NO. 000344 that there be some leveling in comparison to the distribution of low- and moderate-income people throughout the city. I'd like you to provide us with either a chart or a list or some comparison -- this is the second request; the other was an add-onto the first -- to get to this issue of the difference between the HUD definition of low and moderate income and what the income eligibility criteria are in accordance with the HUD regulations that you made reference to in the CD Year plan, I believe, as 13 approved March 9 of the Year 2000, and who would be 14 covered, or what areas would be covered by census 15 track, and which areas are only covered as it 16 relates to Bill No. 1029-AA. 17 And I would like to be able to see 18 the difference that the more restrictive low and 19 moderate income definition creates and what 20 populations are not being served as a result of the 21 restrictive definition, as compared to who would be 22 served under the HUD regulations. 23 The third request is, I would like to 24 see a request from Housing for some level of 25 additional city funding for administration or 264 BILL NO. 000344 program delivery costs as it relates to the CDBG program, the $29 million that is presently in the budget for administration and program delivery costs. In addition, I would like the name and the position and the department that the person works for of every person who is covered by the $29 million.
It is for the program delivery and for the administration costs, the entire $29,703,000. I want to know every person, in every department, in every agency that gets one dime out of those two line items.
Fourth request is what, if any, steps can be taken to seek any relief or financial strategies related to the now present $13.5 million in annual payments, or repayment, of principal and interest for the HUD 108 loans that we 265 BILL NO. 000344 have now outstanding as a result of the pursuit of the policy to put HUD 108 loans into housing. I think you and I had a short discussion not too long ago about some of the options that may be available. That may or may not help us in this. But we talked about securitization and we also talked about portfolio sale. Lastly, I would like to know what your proposal is in response to the issues that were raised by a number of Council Members earlier today about expanded funding for programs that relate to preservation and maintenance activities. For instance, it is my understanding that the BSRP program is facing a possible cut in funding, or will potentially be impacted or will be impacted by new regulations related to Title 10 and the lead abatement requirements for any projects undertaken by the BSRP program. In conjunction with that, I would also like to know what your suggestions and ideas are solely related to the CDBG program -- not to veer off into the city's Capital Program -- with regard to infrastructure and streetscape improvement projects throughout the city that are eligible for 266 BILL NO. 000344 funding through CDBG guidelines. I would also like to know what your suggestions or recommendations are for additional funding with regard to the Model Blocks Program or any similar programs where there is a partnership between the city, possibly a community-based organization, and organized communities for some partial payment for those kinds of activities. And, lastly, I would like to know, I'd like to have in writing, what your recommendations are for areas that want to access the CDBG program, but are not active CDCs and may be more in the category of community-based organizations or civic organizations who do not normally get involved in construction or rehabilitation activities, and generally have no 18 interest in being involved in those activities, and in many instances don't necessarily need significant activity in that particular area. They may have a house or two, but they are not trying to build 40.
As soon as you are able to provide that information to the Chair, I would greatly appreciate it. 267 BILL NO. 000344 But those are the concerns and interests that I have. And I can think of no more appropriate time than to deal with those issues right now, while we are dealing with this budget. And certainly my decisions with regard to the Year budget will be a function of 8 your response to those issues. 9
Okay. I think there is 10 one comment or question on one of the requests. 11 Excuse me. 12 Thank you. 13
Is there 14 anything? Are you going to ask me a question? 15
I just wanted to 25 say, I think there is a person here I think who 268 BILL NO. 000344 would like to be heard on the question of predatory loan discussion we had a minute ago, and I ask that he be permitted to testify.
But I think he wishes to respond to some of the statements Mr. Kromer made. And that will help clear the record for tonight, so we have a balanced picture.
All right. Come forward. We will yield to Mr. Cohen's request. We usually don't have one witness come back again, but we will yield. And after that, we will continue our hearing until 9 o'clock tomorrow morning.
My name is Jeff Ordower, and I am the Office Director for Philadelphia ACORN. Thank you very much, Councilwoman Blackwell, for allowing us to retestify. I just wanted to respond very quickly to a couple of Mr. Kromer's statements. OHCD really does have a very difficult job. And we appreciate all the work that 269 BILL NO. 000344 they do in ensuring, as best as can be done, solid, you know, stellar loan counseling, home buyer education for low and moderate, in addition to all their other functions for low- and moderate-income Philadelphians. However, on the issue of predatory lending, there are a couple of statements that are worth responding to. On the issue of trying to contact and meet with OHCD about predatory lending, ACORN contacted Mr. Kromer's office back in February seeking a meeting to discuss predatory lending. It was only -- it was not until yesterday that we were able to meet with anyone who had some authority to talk about loan counseling. On the second point that Mr. Kromer makes about the onerous requirements involved in OHCD's monitoring under Councilwoman Tasco's amendment, that's simply -- we think that that's something that OHCD should be doing. We have revised it. They are not responsible for monitoring all loans in the City of Philadelphia. What they are responsible for under this amendment is monitoring all loans that use city 270 BILL NO. 000344 money. And we think that that's justified. If they are spending money, then they should know and it should be known whether or not that loan is a high cost or predatory loan. The third issue, which is also very important, is that I have again reconsulted just on the phone with the director of our sister organization, ACORN Housing Corporation, and that the program is in fact structured so that both ACORN Housing Corporation and other loan counseling agencies in many cases have to give predatory loans access to the settlement grant money. In other words, if a lender refers a client to a loan counseling agency, with the given loan product and given fees and rates, the agency -- unless the client changes their mind and asks for a different product, the agency is required, or the loan counseling agency has to send that client back to the lender. So that client could, in fact, be receiving a predatory loan that is city funded. And that ACORN Housing Corporation and other loan counseling agencies do have cases of predatory loans using settlement grant money and other funds, public 271 BILL NO. 000344 funds. So thank you very much. I don't know if there are any questions. But those are the three responses we have to Mr. Kromer's points.
Are there any comments from members of the committee or other members of Council? Thank you very much. Then this hearing will be recessed until 9 o'clock tomorrow morning. (Public Hearing adjourned at 5:14 p.m.) - - - 272 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Tuesday, June 6, 2000, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COMMITTEE ON FINANCE _____________________________________ DEBRA A. WHITEHEAD, RPR