Well, what's the form of it? How do we see it. How do we know 119 2/7/00 FISCAL STABILITY - RES. 000002 that it exists?
It's really -- if you look at the accounting -- our financial statements, it's an accounting of our revenues and expenditures over the years and where they wind up. Our revenues have been higher than our expenditures. So some of it is in the bank, some of it might be accrued revenues. So it's dollars that we've gotten in but that know we will get in, for example, from the State as reimbursements for things, for services that DHS provided. So it's not all actually hard cash sitting in a bank since what we use is called "a modified accrual basis of accounting."
We use what's called "a modified accrual basis of accounting," which means some of our revenues are based on cash, what we actually get in, some are based on obligations people have to us as of the end of the fiscal year. So it's not just sitting in a bank account. It's shown in a couple of different ways 120 2/7/00 FISCAL STABILITY - RES. 000002 and it's not a simple answer to that. I don't think there really is a simple answer to that.
That there's a simple answer to that question. There's accounting treatment for -- accounting for different types of revenues in different ways. It's 205.7 million.
Well, the money not obligated 'cause that's usually what a specialist indicates, that this is yet-to-be-allocated money 'cause if it's already allocated and used --
That's accurate, although in the course of this place, it really isn't allocated. All but five million of the surplus is gone in 2005.
And this year alone, will there be a deficit of 55 million.
There's a few reasons. Some of it is not surprising to us. Part of what's happening now is that we're assuming the cost of the existing contracts, we are now funding more of the costs of the Federal Crime Bill costs, our prison costs have gone up faster than inflation.
Thank you, Councilman. Mr. Dubow, let's go back to your response to Councilman Cohen's question.
I thought the Councilman asked you, how much would it be reduced this year, and will this year end in a surplus or a deficit? And I believe your initial answer was 122 2/7/00 FISCAL STABILITY - RES. 000002 that we would have a deficit this year.
Now, maybe you're speaking about simply an operating deficit.
Right, but let's make sure the record is completely year clear.
On Appendix 3, in FY 2000, we do show at the bottom, bottom, bottom figure, Line Item 31, you are showing $150 million surplus; is that correct?
Yeah. Thank you for that clarification. What we're saying is --
'Cause they're only spending 54.7 of the 205.7 in this current fiscal year.
Yes, but if there's surplus in one year, say the cumulative surplus -- 123 2/7/00 FISCAL STABILITY - RES. 000002 take a round number, were $200 million, and by the end of this current fiscal year, it will be 150, it means we spent this year 50 million --
I mean, that's my full extent of knowledge of accounting. I know nothing beyond that.
I'm glad we know that for the record, Councilman. (Laughter.)
And I -- it used to, you know, maybe this no longer adds up that way. It used to add up that way.
Yeah, but the reason they're able to do that is because they know they have this $205.7 million in surplus --
-- to back up any 124 2/7/00 FISCAL STABILITY - RES. 000002 overspending as from revenues to expenses. I mean, they know they can do it because they have a cumulative surplus.
Well, that's the question, as to the use of the surplus.
Whether -- as I would see it, I'd kind of be worried to death if we're operating the City this year at $50 million in the deficit when I only had backup of $200 million in the bank.
Yeah. Well, obviously, we're very concerned, and that's one of the things that we say throughout the Plan, that we're concerned that the General Fund balance is going down over the life of the Plan and that there are a series of other threats, such as a downturn in the economy, that could threaten even that balance. So we are very concerned.
Somewhere I learned, maybe it was in 3rd grade -- I'm not sure where -- that you don't use surplus for current expenses, because surpluses won't last if your daily 125 2/7/00 FISCAL STABILITY - RES. 000002 expenditures are beyond what your daily intake is.
And that's exactly unfortunately what the Plan shows, that our surplus will go away by the end of the Plan period.
Well, I'm very troubled by that concept and very troubled by why we're having a deficit in this current fiscal year. If there are no unusual -- we haven't had a major flood in the city, we've had no major catastrophes that I know of that are going to cost unduly large sums of money.
But part of what's happening is, there were obligations that we've incurred in prior years that we knew were hidden, so we knew that the 205.7 would eventually start to work its way down, so --
Well, I would like to ask the Chief of Staff if a document could be prepared explaining that situation. Why is it going to cost us $57 million more to go through this year, to survive this year, than our income will be?
Now, is it that we received a lot of unusual income this year? For example, what did we get from the lien tax sale? How much money did we actually receive in the last fiscal year from the lien tax sale? COMMISSIONER KAMMERDEINER: Nancy Kammerdeiner again. I think I can answer that one. This fiscal year, Fiscal 2000, is the first of the distributions from the senior note from the tax lien sale. You may recall that at the time of the sale, we got money in that fiscal year, but we also set aside money that would be similar to what we would have expected to collect for real estate -- delinquent real-estate taxes had we done nothing, had we not sold the tax claims. And the first of those payments, under the senior note, was this fiscal year. The money came in approximately two, three weeks ago, and that was an $8 million payment. We have additional payment in future fiscal years from that senior note, but that's part of the revenue that's part of the Mayor's forecast of revenues 127 2/7/00 FISCAL STABILITY - RES. 000002 for each of the fiscal years that's taken into account as part of the determination of the revenue that you then appropriate.
Oh, I was confused. I thought you said first that there was some money that came in in the year when we made the agreement? COMMISSIONER KAMMERDEINER: Yes. That was Fiscal '97. We sold those liens on June 30, 1997, the last day of the fiscal year, Fiscal '97. And that money came in. There was some money that was over and above what we would have normally collected, and the City --
Could you identify the amount? COMMISSIONER KAMMERDEINER: Off the top of my head, I cannot, but we do have information on that and I can certainly supply it. There was money that came in to the City and the School District. The City chose to set aside a portion of that money to be paid out over time, as I indicated. The School District, because of their budgeting requirements and some of the accounting rules that they are under, had 128 2/7/00 FISCAL STABILITY - RES. 000002 to account for all of it at the same time when they received the funds, but they are, as I understand it, using some of those funds for things that are paid for over time, some accrued costs that would then be held over for some future years. They basically paid some things in advance. I don't have the details on that side. You'd have to get that from the School District.
Were any collections included in the surplus for 1997? COMMISSIONER KAMMERDEINER: That would have -- that money that came in in Fiscal '97 would certainly have contributed to the surplus in that particular year so that the revenues in Fiscal '97 exceeded the operating expenses for that year. And, of course, that would have contributed to the fund balance that we have now, yes.
Could we get those figures and could you send them to the President? COMMISSIONER KAMMERDEINER: Yes.
One last question, or group of questions -- concerning recycling. 129 2/7/00 FISCAL STABILITY - RES. 000002 The recycling coordinator has left the City as of last Friday. There was a pilot program. Do we have any news on the appointment of a recycling coordinator and on the continuation of the pilot plan? I don't see anything in the Plan with respect to recycling, and I know it has many community groups upset throughout the City.
Nice to see you, too. Joan just gave us her notification two weeks ago and we have submitted her name to the Transition Team that's doing searches right now, so we are going to do a national search for a new recycling coordinator.
And are the plans -- the pilot program is in shape to continue?
Well, we're continuing to monitoring the program, so that is continuing, yes, and we are gathering information about the success of the pilot as well as some of the other things that we're doing in recycling. 130 2/7/00 FISCAL STABILITY - RES. 000002 That's not going to discontinue. That plan is underway, that project is underway, but we do need to get a new recycling coordinator on board.
In certain parts of City, the collection schedule changed from twice a week to once a week?
Yes, there have been, as a matter of fact. We have seen some improvement in the weekly collection area. But interestingly enough, and we don't seem to understand this just yet, at least preliminarily, overall, our growth in total tonnage has not increased. And that's a little bothersome to me, and I really haven't had a chance to get that deeply into the numbers yet, but we're going to spend some time with the other folks in the recycling area to try and find out 131 2/7/00 FISCAL STABILITY - RES. 000002 what's going on there.
Well, we'd like to because in the '80s, the City of Philadelphia was one of the nation's leaders. And from what I see recently, the program has kind of gone backward. We're no longer listed among the nation's leaders in the collections process, and I think we ought to pay a lot of attention to that and --
And I hope to have this discussion as the Streets Commissioner comes before you during his testimony to talk a little bit more about this, and by then, maybe we'll have a better sense of why these numbers are the way they are. It's a little baffling to me why, in the areas where we're doing weekly, we are seeing some increase. But overall, the numbers are still staying flat, which is -- it tells me maybe we need to do a little bit better in education. I'm not sure. I mean, I'm just speculating at this 132 2/7/00 FISCAL STABILITY - RES. 000002 point, but there is somewhat of a problem here that we need to address.
All right. 'Cause I know the recycling community is very concerned about the state of the recycling.
Agreed, and I know that they were excited when we brought Joan on, and it's really a loss for us to lose -- for her to have moved on, and we understand that there are always different opportunities out there for people, but we look to find somebody, you know, equally good, and we'll -- we're going to do a national search to try to find that person.
All right, thank you very much. Thank you, Madam President.
Thank you. The Chair recognizes Councilman Goode.
Thank you, Madam Chair. While there seems not to be any serious critical analysis of the Economic Stimulus Program and its success or lack thereof, and it seems to be a carryover from the previous administration, I 133 2/7/00 FISCAL STABILITY - RES. 000002 would like to refer you to some analysis that is contained within this Plan, on . Of the 75,000 jobs that were created under the Economic Stimulus Program, which has not represented a net figure, since 30,000 jobs were created under the category of "Neighborhood Economic Development," another 34,000 in the category of "Business Retention and Attraction," and roughly only about 10,000 jobs created under the categories of "Defense Conversion" and "Hospitality and Tourism," does that suggest that the level of funding from the Economic Stimulus Program is consistent with that job growth? Per category? (William Hankowsky comes forward.)
Good morning. I'm Bill 18 Hankowsky, President of the Philadelphia Industrial Development Corporation. Councilman Goode, I apologize. I didn't get that question in its entirety as I was working my way up here.
The question is -- the question is, under the analysis you do present in the Five-Year Plan on , while there 134 2/7/00 FISCAL STABILITY - RES. 000002 seems not to be a general analysis of whether the program has or has not been effective compared to other time periods -- namely 1984 to 1989 -- this analysis does suggest that of the 75,000 jobs impacted by the Economic Stimulus Program, a majority of those jobs did not come from defense conversion, hospitality and tourism. So was the level of funding from the Economic Stimulus Program in terms of private funding, in terms of public funding, in terms of the General Fund contribution, is that consistent per category? In other words, if 50 percent of the jobs are created under Neighborhood Economic Development, was 40 percent of the funds from the Economic Stimulus Program allocated to Neighborhood Economic Development?
Okay, let me give you a preliminary response right now and then -- just because it would take a little bit of looking at the numbers to give you a full response to that question. This chapter deals with the Stimulus Program in its entirety, and so it's looking at all revenue streams. So for example, if the 135 2/7/00 FISCAL STABILITY - RES. 000002 Commonwealth of Pennsylvania provides us, as they are, with nearly $60 million in a grant for their Regional Performing Arts Center, that's hospitality, we put it in hospitality. On the other hand, that's what it's budgeted for and that's what we can use it for, so not all dollars that are reported here are discretionary. And so -- defense conversion is another good example. There are certain dollars in Washington you can apply for, you can get them, you can spend them there. And then the results are obviously shown by the category. If you take a look at the actual stimulus dollars -- that some of us call the "stimulus money" -- as provided in the General Fund over the last several years, it would not have a breakdown. We didn't put that much of it into hospitality and tourism, is the simplest way I could put it. Out of those dollars. If you look at all revenue sources, there was probably a lot of money in hospitality dollars because we had hotels built, we had state grants for various facilities, etc. So. I could easily provide with you a 136 2/7/00 FISCAL STABILITY - RES. 000002 breakdown of the City General Fund -- you know, what we controlled and what we appropriated and where it went that would be reflective of this breakdown of categories. I can't just do it immediately off the top of my head, but I think it will be more reflective of these job breakdowns than you might assume, given that there were all these other pots that came from discrete sources that were targeted. That's a --
Can you just provide any of that information related to the job counts and how the money actually was invested in the Economic Stimulus Program? Does this six-year picture tell you anything about where jobs can be created? If 40 of the jobs were created percent under the "Neighborhood and Economic Development" category, can we expect, over the next six years, eight years of Street Administration that essentially 40 percent of the Economic Stimulus activity will be targeted there?
If you don't mind, I think you actually asked me two questions. One is, where do you think the jobs would come? And, two, where would you target them? 137 2/7/00 FISCAL STABILITY - RES. 000002 And I think, in terms of where the jobs might come -- and I'll be happy to -- and I will give you a response to that in some more detail. I think part of that is clearly a function of not just where we allocate our resources but sort of what is happening in the economy. So, you know, where are industries and areas where there are prospects for job creation? Clearly one of the theories behind the hospitality investments, where the discretionary targeted, was that this was a sector where we could grow net new jobs and from the standpoint that the City was under-represented in this industry historically, it started, of course, with the development of the Convention Center itself during Mayor Goode's Administration, which was sort of basically the Keystone for us getting into this industry, and then building around that industry from the standpoint of hotels and restaurants, the support funds, etc.
So it was a industry that looked like it could create jobs. 138 2/7/00 FISCAL STABILITY - RES. 000002
And it represents maybe percent of the jobs created under the 6 4 years of the Economic Stimulus Program. 5 My question really is about 6 neighborhood economic development. And if 40 7 percent of the jobs were created there over the 8 last six years, did you anticipate that? And what 9 did you do to stimulate neighborhood economic 10 development, and what things were actually put in place to create 40 percent of those jobs?
Well, again, I think it would take longer than me looking at some data that I just don't have it with me to answer that. In terms of what resources we allocated there --
Well, the first question is, did you anticipate that 40 percent of the jobs being created in the Economic Stimulus Program would come from neighborhood economic development?
Let me -- I'm still one question behind you in answering. So one question was the question of, what did we anticipate going into it? and then 139 2/7/00 FISCAL STABILITY - RES. 000002 what would you anticipate prospectively? And I was trying to answer the prospective question of needing to basically look at industry segments and areas of activity in terms of being realistic about what you could anticipate. I think probably if I tried to think about where we were six years ago and where we are today, I would tend to say I think that we were probably pleasantly surprised at the capacity to grow jobs in the neighborhoods. As you know, it's a very tough environment in some instances to do that. But there has clearly been not only activity that the City has generated, activity that CDCs have generated, and also, which worked to our advantage, which wasn't the case six years, that from a national level, the number of businesses began to look, quote/unquote, back into neighborhoods. So the interest of retailers to come back into inner city neighborhoods is basically a relatively new phenomenon. And you see now their interested in looking for retail opportunities in our neighborhoods, which we should clearly capitalize on. So that to the degree that you can 140 2/7/00 FISCAL STABILITY - RES. 000002 get all the stars aligned, that's the time to take your discretionary dollars and strike.
So while we did not anticipate that 40 percent of the jobs would have come in the neighborhood economic development over the last six years, we should look toward that as a trend, and we should anticipate that Economic Stimulus funding in the future should probably be at least at the level of 40 percent.
I wasn't making a budgetary commitment, which I would never do, on behalf of the Administration, but what I was saying is that --
But there is going to be some budgetary commitment made in terms of where you're targeting dollars.
Well, if I could again answer the first question, then I'll answer the second one. What I'm saying is that I do think, and is reflected, for example, in Mayor Street's various transition committees, one is focused on neighborhood development, one is focused on small-business development, one is focused on 141 2/7/00 FISCAL STABILITY - RES. 000002 emerging businesses, which often are called "the new economy." And I think it is important to be reflective of where are those trends lines. And hopefully, with the helpful suggestions of those groups and all of us working together, we can make hopefully wise decisions about those budget allocations to be reflective of where that job potential and growth would be. And so I think it's consistent with the spirit of your comment; I just don't want to say 40 percent is 40 percent.
For the record, since you're more familiar with the hospitality and tourism data, how much was invested in hospitality and tourism under the Stimulus Program?
I couldn't tell you that off the top of my head. I would just have to look at all of our numbers and just add them up.
Not in terms of City 142 2/7/00 FISCAL STABILITY - RES. 000002 Economic Stimulus dollars, but in terms of the $7 billion Economic Stimulus Program.
-- there's a chart that looked at dollars in the hospitality industry. It's in here somewhere.
You don't have any rough figures in terms of what was invested in terms of hospitality and tourism?
If I had a minute, I might be able to get a rough figure. There was a breakdown, I believe, by sector of the dollars. I'll get that back to you. I just don't have it right at my. . .
Thank you. The Chair recognizes Councilman Kenney.
Thank you, Madam 143 2/7/00 FISCAL STABILITY - RES. 000002 President. I want to go back a minute to an issue concerning the relations with Commonwealth of Pennsylvania and with the legislature, the legislature specifically. I think there's members of the House 8 in Philadelphia, and 102 votes are needed to 9 really pass kind of anything in Harrisburg in the 10 State House, which means that we need, from time 11 to time, 76 legislators from outside of 12 Philadelphia to really get things done for the 13 City. They've been very cooperative in the past 14 in many, many areas, but some areas, according to 15 the Administration, and some others that have not 16 done as well in schools and other types of areas 17 of funding. 18 I want to state for the outset before I 19 ask this question that I am not a member of the 20 NRA. I think that what is happening in our city 21 in the way of gun violence is unconscionable, and 22 I think that the gun manufacturers in this country 23 and in the world owe -- bear a great 24 responsibility for what is going on in our city 25 streets in the deaths of our young people 144 2/7/00 FISCAL STABILITY - RES. 000002 throughout every area of the City. The legislature, on the other hand, as this state has been described, is an -- and I won't give you the actual description, but Pennsylvania -- I mean, Philadelphia, Pittsburgh and a very conservative area in the middle -- and I don't want to pick on any particular state, but I think it was a southern state known for it is conservatism. In this state, they close public schools and private schools for the opening of dear season, which is something that maybe as a Philadelphian we're not real used to or understand. But then, again, I guess people in the center of the state wouldn't understand the Mummers Parade, either. So there's different cultures. The legislature even went as far as to pass a bill which prohibits or attempts to prohibit the City of Philadelphia from suing gun manufacturers. Whether or not that bill is in fact legal will remain to be seen. My question is, considering the legislature's statement about this issue, do you not think that having this as a major agenda item, 145 2/7/00 FISCAL STABILITY - RES. 000002 the suing of the gun manufacturers, which we all agree bear responsibility for what's going on in our city streets, do you not think that having this as a major agenda item potentially causes problems with some of these people we need in areas of school funding and other types of support for the City? And is something that we need to pursue in such a visible way?
Mayor Street has pledged to initiate a lawsuit against the gun manufacturers. Simply because there are issues that the executive branch legislators disagree on, it does not mean that they can't forge effective and cooperative partnerships on other issues. And the Administration is committed to creating constructive partnerships with members of the General Assembly, members of City Council, and also at the federal level. But the Mayor plans on suing the gun manufacturers.
Do you believe, however, that that may or may not have an adverse effect on the attitude of certain legislators as it relates to problems besides gun violence that 146 2/7/00 FISCAL STABILITY - RES. 000002 relate to Philadelphia? Or have that potential?
Well, I would think that there are always going to be times where when there's a disagreement on any issue, and that disagreement could potentially affect discussions of other issues. But I think if you create an environment where there's communication and dialogue with all of the different parties involved and you reach a point of respect and recognition that there are going to be areas where there's disagreement, it doesn't mean that you can't be effective and accomplish, you know, other things simply because you disagree on one issue. And I think that's the way the Administration is approaching it. Not everyone is going to agree with everything that is on the Administration's agenda, but it doesn't mean that the agenda can't be implemented and it can't be successful.
Do you believe that considering the timing of the passage of that legislation trying to prohibit Philadelphia from doing this was a major message being sent by a 147 2/7/00 FISCAL STABILITY - RES. 000002 majority of the Pennsylvania House and Senate?
I certainly think that some people could interpret it that way
Okay, just -- let me move on to another subject. One of the major initiatives of the Street Administration intends to be a $250 million blight removal plan and program, which, in many neighborhoods, if not in all neighborhoods, of the City is really needed. Number one, how did the number of $250 million arise? And, number two, what plans are there to coordinate and have responsibility for the expenditure of those dollars? Is there an agency, agencies, or not-yet-created agency that's going to be responsible for taking those dollars and maximizing the positive effects of it, and who will be responsible?
First of all, in response to your first question, in reaching the $250 million figure, I believe there was some review of the amount of money that the City has spent over the past decade and would need to spend in order to make a demonstrable impact on blight. 148 2/7/00 FISCAL STABILITY - RES. 000002 And it's projected -- and I believe I touched on it in my testimony -- that that could approach $200 million. The idea is to have an all-out assault immediately and to fund the blight removal program through a separate development agency, whether it's the RDA or whether it's PAID or one of the City's other development agencies. The plan itself is still in conceptual development, but the responsibility and oversight is going to be our Secretary of Strategic Planning and Initiatives.
And before she comes to the microphone and answers, I'm wondering whether or not prior to your request that we pass this particular agenda item, will we have in fact a comprehensive plan in place as to how that money will be spent? So that was just an addendum to the question.
Joyce Wilkerson. We are still putting the plan together conceptually. And even as we go through this process, we'll be seeking to involve Councilmembers and their staff in thinking through some of the issues. They are issues that 149 2/7/00 FISCAL STABILITY - RES. 000002 everybody's been wrestling with for the last ten, fifteen years, you know, so they're not new. There's been a lot of wonderful work that's been done and we're, you know, hoping to draw on all of that. We have not made final decisions by any means about where it will be housed. There are proposals that have come out of the Philadelphia Horticultural Society, for example, that recommend that the City create an Office of Vacant Land Management, and that it be the repository of the authority in order to require property, maintain vacant property, and that if have the responsibility for marketing that property. We're taking a look at that proposal as well as a lot of others that are floating around, and we'll be discussing this with Council staff and community, and also, you know, other departments in the Administration as we put the plan together. We're just not to the point yet that you can even move anything around.
Thank you. And just one final question on an issue that Council 150 2/7/00 FISCAL STABILITY - RES. 000002 President Verna, I think, raised with Miss Orfanelli about the recruitment of employees to City government. We had lengthy discussion in the last term about issues relating to the Police Department and, as a matter of fact, gotten approval from the Civil Service Commission, at the request of the Administration, to allow for the waiver of the one-year residency requirement prior to application for those active military people who would like to be considered as Philadelphia police officers. And one of the things I raised with that discussion was the potential of the utilization of our employment opportunities as an economic development tool to bring non- Philadelphians and their families to Philadelphia, with the attraction of being employed by the City. Would the Administration consider, or are they considering, the potential of the waiver of the one-year pre-employment residency requirement for all employees of the City of Philadelphia or all openings, considering the difficult time, according to Ms. Orfanelli, we've had in attracting people to the City? 151 2/7/00 FISCAL STABILITY - RES. 000002 It was my belief then, although some Councilmembers disagree with me, that the potential of not only going out nationwide and having a larger pool of competent qualified applicants, but also using City employment as an opportunity to bring families from outside of Philadelphia, outside of Pennsylvania -- from Florida, North Carolina, California -- to re-populate our city with the lure of a good job here in the City of Philadelphia? Is there any consideration of that at all?
Councilman Kenney, I believe that what you're suggesting is something that the Administration should look at. The School District is also using that. And potentially, that is an opportunity for us to bring in new people to the City, and I believe that we would have to deal with the personnel requirements of the Home Rule Charter. But nonetheless, I think that is something we should consider.
Yeah. And for the record, one of the things -- the thing that I was -- and Councilman DiCicco has an interest in this 152 2/7/00 FISCAL STABILITY - RES. 000002 too is that there was no suggestion that people not be required to live in the City, but simply to waive the one-year not only pre-employment but pre-application requirement. 'Cause what you're asking a person to do really is basically pull up stakes and move into the City with -- to wait a year, with the potential of being employed by the City of Philadelphia in any capacity.
This strategy has been used before for emergency-type positions etc., and there's no reason why we couldn't consider using it in the future. And I agree with you completely on your analysis of the benefit.
Thank you. Are there any other questions from members of the committee? The Chair recognizes Councilman Cohen.
This is probably addressed to the Chief of Staff. I'm fascinated by this notion of developing a big fund of money where there is nothing at the given moment. And 153 2/7/00 FISCAL STABILITY - RES. 000002 that's the $250 million neighborhood blight program. The program conceptually is a great idea, but I wonder, how does one develop that, how does one decide that one can afford that kind of bond issue? Do we have assurances, have there been private negotiations? How will such a bond issue sold? Would it be sold on Wall Street or in some other area where those bonds are floated? How do we get to the point where we say we want to spend $250 million more than we can do through a capital program, you know, of the City's because of a debt limit? And how do we, in general, come to that? Why not 500, for example, on the question itself, comparing what the Chief of Staff said that over a decade, we spent $200 million? A lot of people might wonder whether if what has been achieved with $200 million is really worth going after. Because after ten years, many people feel that very much has not been done in the neighborhoods. So I'm asking for all of those concerns. What were the considerations that led 154 2/7/00 FISCAL STABILITY - RES. 000002 to it, including the fiscal viability of such a bond issue? I mean -- or is it just pie in the sky and a dream?
I can tell you a little bit how we arrived at the number and what the thinking was behind the program. What we've seen in Philadelphia is the City spending between and up, a million dollars 10 annually, in order to essentially preserve the 11 status quo. We looked and saw that we had about, 12 you know, we had about 1700, 1500 properties that 13 we tore down every year, and about the same number 14 of properties came into the City inventory every 15 year. And, you know, we looked around and saw 16 neighborhoods that continued to decline. 17 And the way the Mayor evaluated the challenge was how do you do something sufficiently aggressive that you begin to get ahead of the problem so that you're not just tearing down problems while the neighborhoods -- tearing down properties while the neighborhoods continue to decline? And what we said is if you spend the -- is there a smarter way of spending the $17 million 155 2/7/00 FISCAL STABILITY - RES. 000002 that we currently spend? We spend at least $17 million every year tearing down properties, cleaning and sealing properties, and trying to deal with the problems of graffiti. If you pledge that same amount of money to repay the bondholders, you end up being able to generate a pool of approximately $250 million that you can then use to go into neighborhoods with solutions, as opposed to strategies that basically maintain the status quo, which is, at this point, a declining status quo. Is that -- you know, so that's where the dollar figure came from. It was tied loosely to the number of properties that were abandoned and needed to be demolished and also tied to the amount of money that we currently spend on demolition activities. It happened that, you know, that you end up at the same point, regardless of how you -- which figure you use.
Well, was there any thought given to the number of years the bond issue would last and who among the bond companies would be interested? Has that idea been sampled at all anywhere in the bond-selling community? 156 2/7/00 FISCAL STABILITY - RES. 000002
Councilman Cohen, all of this is still in conceptual development, as we said previously. And so all of the details about the way in which it will be structured and who will be involved and the term of the bonds, these are all decisions to be made. And as we indicated before, these are -- the details of the plan are going to be developed with input from Members of Council and the communities that are going to be affected. And so there's opportunity to give you the information that you're looking for. We're just not in a position to do that now because it has not progressed sufficiently to enable us to answer your questions.
Thank you. The Chair recognizes Councilman Goode.
Thank you, Madam Chair. I'll be very brief. With regard to the bright removal plan, it has been presented so far as a public-sector initiative and there's been talk about involving 157 2/7/00 FISCAL STABILITY - RES. 000002 Members of Council and the communities that are affected by it. But has there not been any talk yet about involving the private sector -- the banking community or the financial corporations -- about what they would be willing to in those neighborhoods invest after the removal of cars and demolition of buildings. Is there some plan to engage the private sector to talk about what capital is going to flow into those neighborhoods afterwards?
We haven't developed a plan yet, but we do understand that there is a need to talk with the different sectors of the community. I've had some preliminary discussions with some of the state representatives, for example, and they're beginning to identify resources that the State can make available. We understand that the blight is just a first part of the plan, that there has to be plan for renewal, and that will entail discussions with the corporate sector, with the banking community in Philadelphia, and the other, you know, segments of the financial community. We have not just gotten to that point yet. 158 2/7/00 FISCAL STABILITY - RES. 000002
My point in question is more so, are we anticipating the development that will take place after blight removal? Will it be financed primarily by the private sector or by the public sector?
I think it depends. What it won't be is the $250 million -- we see the $250 million being spent to prepare communities for development. And then my guess is that a lot of the development will happen as it currently does: it will be a mixture of private and public money, depending on the type of project.
But removal of an economic disinvestment does not create a reason to invest. I mean, is there any discussion on the front end about what will cause banks and financial corporations to invest in those neighborhoods? Dollars are not currently flowing there, and not just because of blight, but for other economic reasons.
I don't have a plan to present at this point. We're taking a look at those issues, and we'll come up with something.
Do you have 159 2/7/00 FISCAL STABILITY - RES. 000002 any other questions, Councilman?
Thank you. The Chair recognizes Councilwoman Brown.
I have a couple final questions, again, in the area of education. One is a question and the second is a request as we look down the road to the school budget hearings. Stephanie, you mentioned under "Service Enhancements," $2.5 million for the District Attorney's Office. And I will be closely at the amount of dollars we put on the preventive side for young people versus the dollars we put on the punitive end. To that end, of this 2.5 million, are any of those dollars targeted towards the Truancy Center, like Truancy Court, is it? The Satellite Truancy Court? That's the question. And then the request is for the School District Secretary of Education. If you could please be prepared to provide figures on the 160 2/7/00 FISCAL STABILITY - RES. 000002 amount of dollars we're spending with metal detectors in the school system versus preventive -- even if that includes truancy activities, how we're handling truancy activities for young people on the other side. The question. There's 2.5 million devoted to the District Attorney's Office.
Correct. It's not -- the 2.5 million does not go specifically to Truancy Court, but what it does go to from a preventive standpoint is the School Outreach Program.
Which, to the Street Administration, is an exciting new program that the District Attorney's Office is putting into place in conjunction with the School District, where they will coordinate on juvenile cases. And the focus is to try to deal with issues of delinquency as well as crime and truancy. So it is intended to be preventative outreach in working with -- in trying to reduce juvenile crime. 161 2/7/00 FISCAL STABILITY - RES. 000002
Secretary Kahn, did you understand the request?
Are there any other questions from members of the committee? The Chair recognizes Councilman Cohen.
It sounds like you're weary of saying that. The last question I have is, is there anything in this plan -- I did not find it, and I may well have missed it -- that relates at all to the car rental tax? And I'll tell you why I raise that. Is there anything in here alerting PICA that next year, for example, we might have a liability with respect to a bond issue on the car rental tax?
The budget in brief contains a car rental tax fund that shows revenues 162 2/7/00 FISCAL STABILITY - RES. 000002 coming in from the car rental tax and going out to pay debt services.
I understand that the provision of the ordinance that the Mayor is considering sending to us carries a guarantee by the City of Philadelphia from our General Fund Budget to pay in the event the car rental tax does not yield the amount of money that the City is presently indicating they think it will yield. Am I right as to that, Chief of Staff?
The ordinances have not been introduced, and I'm not sure that I would characterize it the same way. I'm not prepared to get into details of that legislation right now. I think that's something, though, that we might be able to get into later this afternoon in connection with the briefing.
Well, I think if there is a potential liability on the General Fund, then I think it -- and it's intended to be 163 2/7/00 FISCAL STABILITY - RES. 000002 enacted this fiscal year, I think perhaps it belongs in the Five-Year Plan.
This relates to -- what I believe you are referring to, Councilman Cohen, is the conceptual agreement that was reached with the Philadelphia Eagles relating to the practice facility. In the event that we do not enact legislation relating to new stadiums and there was a buy-back of the practice facility, the buy-back of the facility would be financed with the revenues from -- the projected revenues from the car rental tax. The projections, we anticipate, will cover the cost of the amount of the buy-back of the facility. What the ordinances may provide, and I have to look at the language, I don't have them in front of me, they may provide that in the event that there's a shortfall, the City would make up the difference. But I'm just -- I'm speculating at this point in terms of what they may or may not say. But the idea is that that revenue stream, if we do not proceed with new stadiums, 164 2/7/00 FISCAL STABILITY - RES. 000002 will be used to repurchase the practice -- to purchase the practice facility. If not, that revenue stream could then be available for potential public contribution to new-stadium legislation.
It could be used for any purpose, could it not, under the terms of the state law that authorized the car rental tax?
But the City -- we're running very low on the amount of balance we have in the Capital Fund under state law.
In the amount of 165 2/7/00 FISCAL STABILITY - RES. 000002 money we may legally appropriate.
So that this car rental tax, if not used for any specific purpose by the City, could be used for any purpose, right? It's available for any purpose, according to the --
For any other capital purpose. But to pay a capital obligation involves money from the General Fund for any purpose. And I'm indicating that I believe that you ought to be considering whether there ought to be some reference to that. All right, thank you. I --
Wasn't the car rental tax specifically for stadiums?
No, no. It's not so enacted, it's not limited to that use. It could be for any capital purpose.
Madam President, one suggestion. 166 2/7/00 FISCAL STABILITY - RES. 000002 We ought to get a definitive answer to that question because it was my understanding that it had to be for the construction of sports facilities. Now, if there is some latitude or leeway in there, I would anticipate the potential of the legislature repealing it if, for some reason, we didn't go forward and build anything. But I think I remember reading specifically in the legislation specifically the mention of sports facility, so maybe the Law Department or whatever could get us a --
We will be in a position to respond to that more specifically at the briefing this afternoon on the practice facility. That's the context, and we can go into all the details about the legislation.
Any other questions from members of the committee? (No response.)
Seeing none, this committee stand in recess until Tuesday, March the 14th, at 9 a.m. 167 2/7/00 FISCAL STABILITY - RES. 000002 Thank you all very much for your patience. (Adjourned at 12:30 p.m.) - - - 168 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Monday, February 7, 2000, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON FISCAL STABILITY AND INTERGOVERNMENTAL COOPERATION BILL NO. 000002 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter