COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COUNCIL COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, November 14, 2000 2:35 p.m. - - - (Hearing continued from 10/24/00) Bill 000180 - An ordinance amending Chapter 17-900 of the Philadelphia Code, entitled "Neighborhood Benefit Strategy," by further providing for safe harbor goals. Bill 000181 - An ordinance amending Title of the Philadelphia Code, entitled "Contracts and 13 Procurement," by adding a new Chapter 17-1000, entitled "Employment of Low- and Moderate-Income 14 Persons by City Contractors," which requires persons performing work under certain construction 15 contracts supported by City funds or City financial assistance to hire certain percentages 16 of low- and moderate-income persons, under certain terms and conditions. 17 PRESENT: COUNCILMAN MICHAEL A. NUTTER, Chairman COUNCILMAN FRANK DICICCO, Vice Chair COUNCILWOMAN BLONDELL WILLIAMS BROWN COUNCILMAN W. WILSON GOODE, JR. COUNCILWOMAN DONNA REED MILLER COUNCILMAN ANGEL L. ORTIZ - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 2 I N D E X Louis Applebaum, Procurement. . . . . . . . . . 3 James Roundtree, MBEC . . . . . . . . . . . . . 3 Kevin Brooks, OHCD. . . . . . . . . . . . . . . 3 (Written testimony from above witnesses submitted on 10/24/00 and attached to 10/24/00 notes of testimony.) 3 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 P R O C E E D I N G S
Good afternoon. This is a recessed hearing of the meeting of the Council Committee on Commerce and Economic Development. My name is Michael Nutter, Chair of the committee. Here today is Councilwoman Donna Reed Miller, Councilman Frank DiCicco, Councilman Angel Ortiz, Councilman W. Wilson Goode, Jr., and Councilwoman Blondell Williams Brown. We have a quorum and we will take testimony. (Witnesses come forward.)
Good afternoon, gentlemen. Why don't we do this. Please identify yourselves for the record and then, actually, I'd like to ask you a question and then we'll have some discussion. COMMISSIONER APPLEBAUM: Okay. I'm Louis Applebaum, Procurement Commissioner, City of Philadelphia.
I'm James Roundtree. I'm Deputy Finance Director and Staff Director for the Minority Business Enterprise Council.
I'm Kevin Brooks, with the Office of Housing and Community Development. 4 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181
Mr. Roundtree and Mr. Applebaum, let just me ask you a quick question. The original hearing on this bill was October 24th, or was scheduled for October 24th, and, as you know, we had two other bills that were heard that day. One was mine, it was a TIF bill, and the other was Councilman Goode's, which was establishing a commission. We received your testimony back at that time and, again, I apologize for us not being able to hear you that particular day. Then we recessed to a date certain on November 1st, but that, coincidentally, was the day that we were getting our briefing on the Mayor's neighborhood transformation plan, and so then we recessed it until today. The testimony that you have put forward, is this the same testimony that was offered back on October 24th?
Yes, the same exact. 5 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181
On that day, my recollection is -- at least with Mr. Roundtree and I don't recall with Mr. Applebaum and I know with Mr. Brooks -- we had some opportunity to have some discussion about both of these bills back at that time. Mr. Applebaum is shaking his head; I don't think you and I talked. COMMISSIONER APPLEBAUM: There was no 11 -- we had no discussion at that time.
No, okay. I guess what concerns me is, we had some discussion back at that time about these issues, and I was also left with the impression on the 24th that you, as representatives of the Administration, would take a look at some of these issues. Your basic testimony is, you agree in theory or in spirit that you have some concerns. 6 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 My concern now is that some three weeks or so later, you've now come to this particular hearing with the exact same testimony, knowing that there was an expressed interest in trying to get more toward the resolution posture as opposed to the "we-like-it-but" posture, with no offer of suggestions or recommendations of what can be done to legitimately get to "We like it and. . ."
So I guess what I'm left to then ask is, what have you done since October 24th, anticipating that this hearing was going to take place at some point in time to try to get to more "we like it and. . . " as opposed to "we like it but. . ."
From the MBEC standpoint, we need to gather some more information on the bill that's similar to this, where it calls for the prevailing wage rate. We had to send out some letters and ask for some information to be returned to us. And, unfortunately, that information has not been returned to us as of yet. So we cannot formalize 7 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 a response to you on how best to reply to your initial requests on what portions of this bill 4 would have some effect of overlapping another legislation -- another piece of legislation. And that's what we were hoping to do in our conversation.
And that's what I was hoping to do from my conversation with you. Part of our concern is -- is the impact that this would have on minority laborers.
And before I can provide you with an analysis of that, I need to know who's in that labor pool and what will be the definition of "new hires." And we were hoping to put together that information for you. But, unfortunately, we have not received the information back in the --
Who are you trying 8 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 to get this information from?
Okay. Well, what is your thought or belief about what "new hires" is? And tell me what your concern is. As I've read in your testimony, I mean, one, without any conversation with me, you've made an assumption that I wish that I would somehow stupidly propose that we would somehow take actions that would be adverse to people who are currently working. Now, I think you and Mr. Applebaum and Mr. Brooks and anybody else that was involved in putting this testimony together should certainly know by now that I would not want to affect anybody who is currently in the workforce, and that we were talking about new -- net new employees. Now, doesn't that make more sense than the former?
Well, without getting personal, I didn't assume that you personally was drafting anything that was going to affect -- that was going to impact or effectuate the labor union. What I said our interpretation was -- 9 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181
But that is the sum and substance of the testimony without a discussion, right?
When you -- when you -- when you compare how it's implemented in the real world, that's the net result of what would have happened, and my attempt to explain that was using an example of the labor union and how -- when you -- when we establish programs of this nature, the very first thing that people do, especially companies, is go out and hire a person as a laborer. Well, we already have low- and moderate- income people who are in the unions considered as laborers and then they will be the ones who will be displaced. That was my example.
Because they would not be -- 'cause of the new hires. You have to be -- from my interpretation or impression of a new hire, a new hire is someone who never had a car before, who's never been involved in the construction activity. Someone who's worked on a project is now not considered a new hire. If they 10 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 worked on it for any duration, we tend to -- I mean, you can give it a timetable, but once they've been involved in the system, they are not then considered new hires. So someone who has never been involved in the construction industry with the MBE is placed in a position that would compete with them for another position.
Well, let me ask this question. I mean, what is this information, I guess, that you're trying to get? And is it something so unique or different, that has never been asked for around this place that it is not already available?
Well, it has been -- I'm assuming for 20-some years, it has been asked for, but it has never been, to my knowledge, been received, but basically --
What is it -- 'cause I don't know what the informational search is that you're on. What is it that your trying to find out?
The number of actual members in each one of the trade unions that would 11 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 be participating in construction projects on City -- as it relates to City activity, the number of journeymen they have, the number of apprentices, and the number of -- by gender and race.
No, a journeyperson is classified as a skilled individual. And then they're an apprentice, that they are -- they are paid for two -- there are three classifications. You can correct me if I'm wrong, Kevin. There are three classifications within each trade. One is a general foreman, one is a journeyman, and then one is an apprentice. Each one of them is still card carriers and pay into the union benefits.
And then there's also a 12 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 category of laborers. There's types of laborers. Laborers are --
Just to further clarify Mr. Roundtree's comments, in addition to mechanics, you've got the foreman, the journeyman, and apprentice. You also have the laborers category. So you have mechanics and laborers as sort of the broad categories. Within the mechanics category, you've got the three classifications that Mr. Roundtree referred to. COMMISSIONER APPLEBAUM: An apprentice is, generally speaking, in the labor unions are the new people, the younger people coming into the trades, who are going to be trained to learn the trade. They, generally speaking, when they're retained and work on a job, receive a lower level of pay than a journeyman. And a first-year apprentice might earn 40 percent of the journeyman, and each year, that rate goes up. So the training program for unions stipulates that the person comes in and he is versed as an apprentice and then moves up to be a journeyman. 13 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181
The issue that we have here, and Councilman Nutter, in my testimony, I have indicated some suggestions how we could accommodate what we're trying to do here, and I thought the purpose would be to discuss the suggestions to see how we can make sense to implement the program.
Such as -- the critical issue here is to work with labor unions to get them to increase their pool to bring on new apprentices from the neighborhoods, low- and moderate-income people, so that when we require the construction companies to provide X-percentage of workers on each job to be from that pool, that they are available. We can require them, the contractors can demand them, but if they are not available, the program fails.
Now, when you say "if they're not available," I mean, are they not available because they're not already in or they're not in the apprentice programs? Or -- I 14 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 mean, what do you mean? COMMISSIONER APPLEBAUM: They're not available because the union has not opened up their ranks to go out and to join in the union and send them to the training apprentice programs that most unions have.
I don't understand. Why is that? COMMISSIONER APPLEBAUM: Why is that? Because --
I mean, I don't -- I am nowhere near any kind of expert on this. I know a little bit of stuff, trying to learn more. So, I mean, again, I go back to the one provision which I guess has drawn the most attention is on , which is number 1 in parentheses. Now, is this the issue where you get new hire, which that word-- phrase is actually not used, but are you talking about, Every covered construction contract shall contain a provision requiring the business, that the business responsible for performing work under the contract must certify that at least 40 percent of the workers who are hired specifically to work under 15 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 cover of construction contract are low- and moderate-income persons? Is that the provision that raises all the concerns? COMMISSIONER APPLEBAUM: Well, it's the whole program. Our goal -- the bill's goal is to being a certain group of people -- low-, moderate- income people --
Right. And Mr. Roundtree, I thought, though, said earlier that many of the laborers were already low- and moderate-income people. I thought that was his testimony earlier. COMMISSIONER APPLEBAUM: No, no. 19 Realize once a person becomes a member of the union and goes out to jobs and works, he no longer can truly be considered --
Right, a low- and moderate-income worker. COMMISSIONER APPLEBAUM: Right. The union scales are so high that they are not 16 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 considered low-income people.
Right. COMMISSIONER APPLEBAUM: The low-income person is a brand-new person, who goes into the union, becomes trained, gets his union card, and goes out to work. Now, under the provisions of the bill, I think for the first three years that that person is employed, even though his level of income is higher than the rates, he still is considered a low-income person for your -- under the provisions of this bill.
Mm-hmm. COMMISSIONER APPLEBAUM: So the goal and the problem is to get these people, who are not members of the union, into the union, get them trained, get them a union card, call them "an apprentice," and have them be used on our jobs.
Why don't you walk me through -- 'cause I truly want to understand this -- both the challenges and the problems and also where the opportunities are. The project goes out to bid for a rec. center or some other City project -- and this is 17 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 geared toward City work. The call goes out to -- or I guess the bid goes out, people respond, they do whatever they do in order to get the work. And they bring in their workforce and, I guess, then it's primarily subcontractors whose employees are also usually union members; is that right? COMMISSIONER APPLEBAUM: Generally speaking, the bid goes out, and based on the program here, we would stipulate in the bid that you must conform to these particular rules and regulations, and we would say on this particular construction job -- let's say you're building a rec. center -- you must confirm that 30 percent of the workforce be low- and moderate-income people. The bidders would then bid on that, we would award a contract to "ABC Construction Company," and they now would have to get -- go to the union and get these apprentices that we're talking about and put them to work. And they'll be willing to do that, and they will do that. The problem is, when they go do the union to get these people, they're not available. And they're not available because the union has not seeked them out to bring them into 18 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 the union and train them. So there --
If they don't do that, then who do they use? I mean, obviously, somebody's doing the work. COMMISSIONER APPLEBAUM: The unions have a full complement of people who are considered journeymen that they use, and most of the construction companies have their own staff of union journeymen who they use. Now, a builder, when he goes to a big, big project, will have to go to the union to pick up additional people, which he doesn't have enough on his staff to do the work, 'cause they can't carry a full complement of carpenters the whole year; they go out and they get a job and then they go to the union and they bring them in. And the union will send them journeymen, the contractor will say, Hey, give me some apprentices, give me a break, give me one apprentice for every six journeymen so my rates stay down a little bit, and the unions will try to provide that. But if the union doesn't have the people that we're trying to -- to help in their roles, the contractors who bid on our jobs can't 19 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 do anything about it, they're handicapped, they're going to have source of personnel.
And is that how you end up, then, at times with -- when we get these reports from Mr. Brooks that indicate that on especially some of the larger jobs, you have significant numbers of people who are not from Philadelphia working on those jobs because then they have to go to other places to get people? COMMISSIONER APPLEBAUM: Well, the unions headquartered in Philadelphia, the carpenters union and the electrical union, they have a large something of people. And, as most other companies in the City of Philadelphia -- the banks and CIGNA an all the rest -- a large number of their employees reside outside of the City of Philadelphia 'cause they do not have a requirement that says if you work at CIGNA, you must live in Philly, or if you're in the carpenters union --
I understand that. COMMISSIONER APPLEBAUM: So what happens is --
CIGNA can do whatever it wants to do with its employees -- 20 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 COMMISSIONER APPLEBAUM: And the unions do also, they attract their membership from, I guess, the whole Delaware Valley. And that's what the result is.
Yes, those are two -- again, my name is Kevin Brooks. Councilman Ortiz, those are two recent projects, the Ritz Carlton project, that's the August update where --
Through August, from start to that period. The first report is a completed project. The City Hall Annex project is a completed project and that data is, I'd say, approximately 80, 90 percent accurate, plus or minus, but that's a completed project. The City Hall Annex project is completed. The Ritz Carlton project, we are still updating. We probably have a couple more months of updates to provide, but that project is 21 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 finished, but we're still compiling the reports to show the workforce participation. Both of these projects are --
How long is the apprentice period? How long does the apprentice -- a person that is an apprentice is an apprentice before he gets the union card?
Yeah, that varies by trade. Normally, an apprentice is -- it's a four-year period. You go from apprentice to journeyman, and that normally takes approximately four years, but I understand that that varies based on trade. I'd just like to also --
Yeah. Once you reach that four-year period, plus or minus years, then you are classified as a journeyman and you receive a journeyman's wage.
You receive a card once you're admitted into the union. So once you are sponsored by a contractor -- say, for example, an 22 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 electrical contractor agrees to hire me, I have passed the apprentice's test, so now I'm eligible for membership into the electrical union. A contractor agrees to sponsor me, meaning that they will pay my union dues, my salary and benefits to the union. I will work for that electrical contractor. Normally, there's a probationary period -- I think 90 days or more. And then -- and then I pass that probationary period, and I will continue to work for that contractor and/or the union in general. And that's the way the apprentice process against. I would just like to -- I'll answer any questions, but I would also like to just go back to the question around the larger commercial projects because it's been my recent experience over the last year or so to work almost exclusively on the hotel projects. And the -- the -- the need for skilled labor is -- cannot be understated. And so you -- so, for example, carpenters, there is an incredible need for carpenters, and they pull the carpenters from the metropolitan area, the Philadelphia, the surrounding counties, and as far away as the need 23 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 demands. There is a good-faith effort, I would say, among some trades to do the outreach. Our office asks for, based on the requirements of local participation, both with the neighborhood benefit strategy and Section 3, to request local participation. There are -- the way this normally happens is, a letter -- we meet, meaning I will meet, or Mr. Roundtree and others will meet with the general contractor, or the construction management company in this case, and the specific trade contractor, and say, You got to do something in this area. They would say, Well, we have to work with the union and we will request labor from the union. And normally there is a letter, there's discussions saying that the City has this requirement, we are trying to comply with this requirement, can you help us out. And the answer invariably is yes, but nothing is forthcoming. So the project goes on, workers are pulled -- skilled workers are pulled from the available unions, and that's how we end up with low participation, specifically in the skilled 24 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 trades. And then, in addition to that, there is a ratio of journeymen to apprentices, and the unions stick very closely to those ratios. And, again, that varies by trade. But, say, five journeymen to one apprentice. And so the opportunities for apprentice participation is driven by the scale of the total workforce needed, but those apprentices and training opportunities are also limited by the union ratios of journeymen to apprentices.
We asked -- at the last hearing, we asked for OHCD and the other projects that we have, and I don't know, I just saw this, so I don't know how complete this is and -- but something similar to this for all of the contracts that we have given out from the City. And when can we expect that? When can the Chairperson here expect that?
Councilman Ortiz, let me start by trying to explain to you the huge, incredible work involved in completing this kind of a report. It -- I had to borrow -- I had to borrow one former staff person, and I have to 25 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 publicly thank the Housing Authority for lending me a former staff person just to compile this information. It is a huge undertaking.
Mr. Brooks, before you go into all that, 'cause your testimony raised some concerns with me in that particular area. You said -- let me get a better understanding of -- what's your position?
I am the Assistant Director for Equal Opportunities and Affirmative Action.
It is to coordinate employment and contracting policy among the City and quasi-City agencies that receive federal funding for housing and economic development projects, meaning that I would work closely with the Redevelopment Authority and -- the Redevelopment Authority, Commerce, PIDC, primarily around making sure that local provisions that require employment -- local and federal provisions that require employment and contracting and subcontracting goals are achieved. 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181
With respect to the Redevelopment Authority, they have a staff. They have dedicated staff to --
And you're supposed to monitor all of the various projects from all of our various economic development agencies for compliance with either Section 3 or formerly Executive Order 295 and now the bill that was passed by Council last year; is that what you're supposed to do?
That's correct. 27 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181
They help complete -- they help do the reports that I do to HUD and to City Council on these projects.
Who actually does the monitoring of the various projects?
Right now, there are approximately five and they're all commercial -- large-scale commercial projects.
Aren't you also responsible for all of the OHCD projects that are funded through the CDBG program?
Not OHCD projects because we're policy and planning, we don't administer any activities at all. The Redevelopment Authority is responsible for reporting to my office around 28 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 employment and contracting accomplishments, and that's how you get the monthly report that we send to you.
That report is essentially a report that's created by the Redevelopment Authority on housing and commercial projects.
But who actually monitors what goes on at the particular job?
How do you know that the numbers you get from the Redevelopment Authority are actually correct? How do you know that?
Michael Bell is the assistant director -- he's the director there. He has a staff of two or three people who work on wage compliance. A large number of these projects are prevailing wage projects. The contractors certify this information. There are discrepancies 29 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 at times, and they have a staff that investigates those discrepancies. He also has two staff persons to work on housing projects, so the first staff does the monitoring and --
Well, my analysis of this is that -- tell me about your three support staff people; are they of a clerical nature?
Okay, all right. So it's you and three clerical support staff people who are responsible for compliance issues for a half a dozen agencies?
And so then based on that -- I mean, I don't think you have to work for, you know, Hay Associates to figure out that it's virtually impossible, based on your administrative staff, to do your job. 30 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181
I would agree, and what I have worked to over the last two years is to have the Office of Housing and Community Development be the policy and planning agency have the delegate agencies who are responsible for administration of these activities actually monitor the activity themselves. I use, again, the example of the Redevelopment Authority. I would say four or five years ago, six years ago, Councilman, the Office of Housing was involved directly in the administration of Redevelopment Authority projects. That whole function now has been transferred to the Redevelopment Authority to administer for employment and contracting with their own staff. I just recently effected a similar transfer for PHDC activities, the Philadelphia Housing Development Corporation activities. My office had been responsible for monitoring that as recently as six month ago. They now have that responsibility. I have -- we've been in discussions with the various agencies around the transfer of monitoring to either the economic development 31 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 agencies or some other agency to actually monitor these commercial activities, but it is a huge task, and we are -- we are failing at that task. And the Administration recognizes it and we're frying to address it.
And with regard to the information that Mr. Roundtree talked about, are you involved in trying to secure that information as well? Or, I mean, just -- who's doing what in terms of the information search, and what has been the difficulty?
Mr. Roundtree had the obligation, he's working on that directly to get that information and answer those questions for you.
Okay. Now, you also talked about the Loews Hotel project. 'Cause, again, I really do want to try to understand this.
Now, how many people worked on the Loews Hotel project?
I don't have -- we're talking construction now. I don't have the total 32 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 number of workers, construction workers, on that project; I will get that. We can do -- I can do a similar report to this that I've given you if you allow at least six weeks to do it. And I'm not exaggerating that that's how long it will take to compile this information.
'Cause your testimony says that -- 'cause, again, I'm very intrigued by this. You said on the Loews Hotel project, we negotiated the hiring of four new hires, individuals who were not previously employed. Now, the Loews Hotel is the former PSFS building.
Is there any reason to assume that the number of people who worked at the Loews would be significantly different from the number of people who worked at the Hyatt? I'm 33 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 assuming this is the Hyatt down at Penn's Landing that you mention in your testimony?
That hotel, you said, had 741 workers. Is there any reason to think that the Loews was significantly different than that?
I think the Loews, probably in terms of total workers, was a little higher because of the number of rooms.
So what does it mean when you say that you negotiated for new hires on a project that had 800 people working on it? What does that mean?
What that means is, as part of economic development plan that was developed for the Loews Hotel project, one of the 34 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 provisions was new hires, which are, similar to the definition that Mr. Roundtree provided, people who had not been previously employed in the building trades. They are essentially people off the street. In those discussions were the construction manager, the Minority Business Enterprise Council, the representatives of Loews Hotel. And we -- we had a discussion around the number of journeymen that are likely to work on this project. Based on the number of likely journeymen, the (unintelligible) back into the number of apprentices.
Based on the ratio. And then you back up a little further and say how -- in what areas can we add new people across trades? So it may be a carpenter and an electrician or plumber. That was the task. The construction management team went back to the contractors who were successful bidders on the project, and they together arrived at what they considered to be a reasonable number 35 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 of four. And that's how you got four. It was -- it was based on the unions -- this was a complete union project. It was based on the ratios of journeymen to apprentice on new hires.
Do you know what the ratios were for Loews, City residents versus non-City residents? And do you know whether the four people were City residents or not?
Yeah. I don't know yet, but it was pretty close to 50 percent, maybe 50 percent local residency on the Loews.
And do you know what the race and gender breakdown was of the workforce?
Do you know what the race and gender breakdown of the workforce of the 800-some-odd people?
I don't -- I can -- we -- I didn't come prepared to discuss the Loews Hotel project. 36 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181
I'm sorry. When you said "yes," I thought you knew at the moment, as opposed to you know but you don't know right now.
I would just like to add that the bill that's before us is a bill that, I think, is a composite of the efforts by Council and the Administration to expand employment opportunities based on some federal and local provisions that try to do that. And it's in my -- in my experience, that goal is valuable and laudable but we need a different model. We just need a very, very different model, and --
I'm not locked into any particular model, there's no particular pride in authorship. It was, you know, an attempt based actually on some models in other cities to take a look at how you can help ensure that people who have a need in a particular locale are able to take advantage of opportunity. If there's a tremendous amount of activity going on, it seems to me that, you know, 37 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 the pot should, in fact, grow a little bit, or the pie should get a little bigger. I don't necessarily know if we are seeing that, and in a previous hearing, we were told that not only is there a tremendous amount of construction activity going on in Philadelphia, but the result of which that the projects have become more expensive, and there are fewer people around, at least nearby, to even work. I mean, you know, some of this -- I mean, again, this is not necessarily my background, so a lot of it, I mean, does sound a little strange. I'm sure for someone who's more versed in it, it may actually be logical and make a lot of sense. But it seems to me that if all of this activity is going on in our city, that more of the people in the City who have a need should be able to take advantage of the opportunity. I'm not trying to stop someone else's opportunity, which may be short- or long-standing, I'm happy for them. I'm just trying to figure out how we create more opportunity for people who are right here who, in many instances, maybe never had the 38 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 opportunity. That's what I'm trying to figure out. The last thing is, a concern was raised, and I guess strict reading might lead someone to think this, but I'd like to at least get it straight or get it cleared up for the record. There was a concern that the proposal to require some set percentage, which is not written in stone, it's written in a bill, which is always subject to discuss and change, but that the mere requirement that a certain number of low- and moderate-income people to be hired on a particular job would somehow lower the wages and -- I mean let me state very clearly and directly for the record, I have no interests, and there is nothing in this bill that talks about wages. It talks about a categorization based on socioeconomic categories of certain people who are at a certain socioeconomic level in their lives. And I understand at the moment you are to be hired, more than likely over some relatively short period of time, that person probably will not be low- and moderate-income for much longer, but that the mere hiring of them would have no effect on 39 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 the wages that are actually paid or may be paid or supposed to be paid. Could you comment on that and make sure that we're both clear, at least based on what my attention was and based on what your interpretation is.
We're absolutely clear. It will not have a adverse effect of lowering the wages, that the issue that I was trying to explain, and somewhat Kevin was illustrating, was how people are brought onto the site and how they are maintained.
And when we talk about the example of the four individuals, each one of those individuals are hired by four different contractors, so the impact on their experiences is not as great as if it was all four hired by one. And that's the unique situation that we are faced when we are trying to make sure that we get low- and moderate-income people involved. Also, those four people were from Philadelphia. And Mr. Applebaum's example of programs that have been working, what we've been 40 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 looking at is trying to expand the number of pre-apprenticeship programs that they have to make people available.
But programs like the Urban Coalition, the Philadelphia Housing Program, the (unintelligible) program, and Congreso de Latinos, they all have exemplary programs to help people prepare themselves for the apprenticeship program. And what you heard in earlier hearings where they were talking about the large number of construction projects that were going on and the relatively -- the impact that it would have on the labor market, they were talking in the skilled trade area. They were talking already about journey people who would not be available for projects that they were going on simultaneously. And so that's how the call goes out to the other locals to provide skilled craft workers. 41 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181
The Chairman asked you about your office and the personnel. And the issue is that we asked we asked about all of the neighborhood construction programs that are out there, that are going on in North Philadelphia and in the Barrio and in West Philly and so on. And you said that you're not the one that's supposed to get those numbers; is that true?
So who's the one -- are you supposed to get those numbers?
Right now, my office is responsible for economic development data. And based on a priority, I have devoted all of my time and attention to the large-scale commercial projects.
I understand that, I understand that, you said that. What I want to know -- because I think what this committee and myself and Councilman Clarke -- and I think we've 42 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 been trying to get this now for quite a while. I know Councilman Clarke has been looking into this as long as he's been here. And we've asked for the numbers over the last year of all projects, construction projects, that are going on in the City that are related one way or the other with City assistance and subsidies, be it through PIDC, be it through OHCD. We're talking about the Norris Square Association, Asociacion de Puerto Riquenos (unintelligible), we're talking about the (unintelligible) project that goes on. And we've asked for more or less data that goes to skills. And I know that when we passed the prevailing wage legislation, I asked for that type -- for that type of information. And now I have only two projects, two big ones. The Loews we don't have, we don't have the other projects that are coming on line. And I don't know when we're going to get the numbers from the other projects across the City that deal with OHCD and so on. I mean, we just want -- because in order for to us get an idea, we have to have a very clear picture of what has gone down over the 43 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 years. And Mr. Roundtree understands. I mean, we've been through year after year, trying to get this information. I have a letter from someone that tells me that he can't get the information that is -- the unions refuse to give him the information. And from your chart, it seems that some information was refused to you. And, you know, I think -- I don't think we can tolerate that. If we're going to have a picture, we need a picture that is not, as George Bush says, "fuzzy," all right? We need a very clear picture. We need a Kodak moment type.
I'm in complete agreement, I'm in complete agreement. Allow me to try to explain what we have tried to provide to you. Currently, we submit through my office a monthly report of housing activity. The Congreso de Latinos is a training program, but APM (unintelligible), all of the neighborhood housing projects are reported to you on a monthly -- on a monthly basis now. It is not --
Well, not in the format 44 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 that --
Not detailed. We asked by gender, by race and by skills and residence. I'm starting to get some from OHCD, but it is like they give you two weeks, and that's one picture of two weeks. They don't give you a full project.
Councilman, my office is the Office of Housing and Community Development. The monthly reports that you received are the housing projects, not in the exact format that you, in fact, have articulated today and have asked for in the past.
That is -- you're absolutely correct. It has not been provided in that format, and we have provided it in a format that Council requested through amendment to OHCD's funding.
But in hearings from OHCD, I can show you my questions.
I can go back to the testimony, I can go back. And I had been promised 45 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 that it was going to be done by skill levels -- carpenters, electricians -- and then by race. It was going to be done by Puerto Rican, Latino, African-American, women, and so on. We haven't gotten that. And then residences, though we added that. And we got some of that, but we don't have it detailed, we don't have the picture, we don't have it -- it is very fuzzy. And in order for us -- because they come in here and they fill up this place.
On the housing projects, you're absolutely right. And all I can say, Councilman, is that the resources at the Redevelopment Authority are overwhelmed as well. I have tried to prioritize the commercial projects to give you the information in a format -- the Kodak shot. What you have before you are two projects. There are five total projects that I've been working on. And I can provide the information on those other three. But on the large-scale commercial projects, I have tried to provide to you exactly what you've asked for. On other neighborhood commercial 46 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 projects, there has not been the priority from my office because I'm only one person. I've tried to give you some of the information, it's not all of the information. And I think Councilman Nutter is accurate: we're just overwhelmed with the reporting needs that you have. COMMISSIONER APPLEBAUM: If I can make a suggestion, Councilman. We know that the jobs that you're speaking of are union jobs. If we could get the rolls from the unions, if they could give you the information of their employment base, with all of that information, you would then know that this is the union employment base of the various unions in the City of Philadelphia, and that would answer your question. Whether you know it by job or by location, whatever, I don't think it's as important as to know that the union base in the City of Philadelphia is made up of X-number of people -- race, male, female, what have you. And that's all available, should be available, from the union rolls of the employees that they have signed up, apprenticeship apprentices and 47 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 journeymen. And, secondarily, if we could sit down with unions and share with them the problems that we're talking about --
Not all of the jobs are union. We want the union jobs, we want the residents. I mean, why can't we get that information? First of all, why can't you get that information?
Well, the information -- the information is being submitted, monthly reports are submitted. They submit weekly on prevailing wage projects to both housing and commercial projects. The reporting compliance has increased. So we are getting -- we are getting compliance on reporting. It is calculating, summarizing reporting that is the problem, quite honestly.
Okay, I believe Councilwoman Reynolds Brown has a question.
The problem has not been so much reporting compliance, meaning that we're 48 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 getting the reports from contractors. It is the data inputting and summarizing for all of the housing and economic development projects. That is the challenge.
Okay, two points. One, you had mention in response to Councilman Nutter that you believe that this model is not the best, and you mentioned that there are other models that are working. And, of course, the Councilman's response, and I agree with him, there's no pride in authorship 'cause the bottom line is that we're trying to achieve a goal here. How we arrive there is always negotiable and open. I would certainly be curious, and you should refer that information to the Chair, about these other model that that may be working, because the reality is, as you've heard in the previous hearing, there is now a chorus on this Council, we were all singing the same song. And implicit in that is an insistence that we're going to expect greater effort on behalf of the City when it comes to ensuring that low- and moderate-income workers were getting access, access, access, 'cause that's really the bottom 49 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 line. That's the one point I wanted to make. And I have a question, quite frankly, that I've just forgotten. But I just simply want to underscore the importance of hearing what we are asking. It was mentioned during the last hearings, and Councilman Cohen stated it most eloquently, that early in his tenure here, he was a loan soldier, he and Councilman Ortiz. That is no longer the case, where there's an expectation that efforts are underway to ensure that the community we're interested in is indeed ensured access. And I certainly hope to remember my second question, Mr. Chairman, before we finish up.
Councilwoman, with all due respect, I think you want your constituents to have more than access; I think you want them to have actual employment opportunities. What we will be articulating to you from this point on can't be construed as access. The mere fact that people send out information and notice is access. The mere fact that we advertise all of our 50 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 construction projects in the newspaper is access. What you want to get down to is how you're going to effectuate getting people who have never been in the rolls of employment on these construction projects.
And what we tried to articulate in some of our testimony is the fact that there are four or five models out there that do a good job -- not necessarily a great job, but do a good job in preparing people for the apprenticeship rolls. You're going to have another hurdle once you get to, again, access because access also talks about the availability of the apprentice lots for the people who actually take the tests. That access is how we match those individuals up who pass the test with contractors that will commit to employ them for some length of time, based on the projects that they have. And you're going to hear from, at some point, the minority business community on their ability to have access because they will tell you that they will employ those people that you seek 51 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 to have in their rolls -- if they too can get access to some of the growth and development that we have. And I think that we need to begin talking about the specifics of getting people opportunities versus access. I'll get you access all day and access won't really get you a contract or won't get you employed get. It will you to the door. And I think what we're committed to doing in this administration is to try and bring to you some areas where we can effectuate some of your change. And Kevin said it succinctly. For his agency, it would be difficult now to get the information -- not impossible, not impossible, but difficult. We have requested the information that Councilman Ortiz has asked for from the unions, and that Commissioner Applebaum said you should be able to get. We have requested that, based on your -- the bill for the prevailing wage rate, which gave the Minority Business Enterprise the responsibility of --
No, I just -- yeah, but if you recall when we met, we instituted that (unintelligible). We gave them a deadline as of Friday, November 17th to begin at least a dialogue of getting information to us. I will report back to you of who responded and who didn't. At the end of the press conference yesterday on the stadiums, I talked with three or four of the labor labors who indicated they had the gotten information and they were going to be very cooperative. I haven't received it, but at least, you know, we're to that point.
I do remember my second question. Are there any infractions or penalties imposed on those who do business with the City when it comes to not honoring provisions such as the type that's being presented today currently within the system?
Yeah. There are -- there are -- there are actions, sanctions that are applicable for noncompliance from noncompliance with reporting, noncompliance with good-faith 53 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 effort in trying to achieve the goals on the activity. And there are federal sanctions that could be applied.
Those that you've mentioned, are they imposed by the City? Because federal becomes a far-reaching --
Well, they are local recommendations. They would be local recommendations.
Okay, recommendations are different from infractions, recommendations are different from penalties. Are their local penalties and infractions that can be imposed on those who want to do business with the City, are given an opportunity to do business with the City, but then do not honor the provisions of the contract? COMMISSIONER APPLEBAUM: Well, there are many sanctions. The whole area of prevailing rates, prevailing wages, when a contract is issued under prevailing wage rules and regulations, we have a department within the City of Philadelphia, it's the Division of Labor Standards.
Okay. 54 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 COMMISSIONER APPLEBAUM: Who have the responsibility to get certified payrolls to make sure and determine that the contractors are paying the prevailing wage. If they are not, they can be disqualified. And we have situations where we have not qualified vendors because of prevailing wage violations. We've even had situations where vendors -- where contracts were removed.
Excuse me, Commissioner. With all due respect, that office does not function, it didn't function in the previous eight years. It has one staff member. It really -- whatever is -- there has never been a sanction, you know. I don't know of any one sanction that has been done. COMMISSIONER APPLEBAUM: Well, I can give you a -- I was in federal court with a company called Ray Angelini who bid on a -- I think it was a 6 or $7 million electrical contract job for the Airport that we didn't award to him because of prevailing wage violations that were in his record. So there are -- there's not a lot of them, but there are a number of cases where 55 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 contractors either lost jobs, weren't awarded jobs, or weren't allowed to bid on jobs because of prevailing wage violations.
Can you give us a number on that over the last eight years? COMMISSIONER APPLEBAUM: Over the last eight years? In the number of cases or the number of dollars?
The number of sanctions that you -- COMMISSIONER APPLEBAUM: I would say in the last eight years, maybe we've had ten to fifteen specific prevailing violations that were serious violations. Granted, that particular department is not a large department --
Can you give us -- (Unintelligible, parties talking over each other.) COMMISSIONER APPLEBAUM: -- but they're there.
Can you give us those fifteen cases and what the violations were and what the sanctions were? COMMISSIONER APPLEBAUM: I can go back 56 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 and get a list for the number of these violation cases that we've had, sure.
Thank you, Mr. Chairman. Mr. Roundtree, we've referenced several times -- you have today and earlier in our discussion -- that the two or three, maybe four programs that you would like to duplicate, and understanding that they're not the best-case scenario, but before we end, I think as we move ahead, we're going to ask people to duplicate that. Before we move ahead, could you get me the numbers on the current placement and training program? Because, you know, I think at a minimum, we referenced those.
And I want to make sure that we're referencing the right program.
Mr. Applebaum, on the bids, and not necessarily relating to this 57 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 bill, traditionally, what's the percentage, the range of the percentages of bids that come in? Is there usually like a percent discrepancy in 5 bids, a 10 percent, 15, 20? I mean, is there a broad range? COMMISSIONER APPLEBAUM: What do you mean by "discrepancies"?
Well, I'm saying in terms of the range of the respondents bid for a contract -- a request for a proposal either in the Office of Housing or in any other service contract related to the City of Philadelphia. When you see these responses, are the bids traditionally relatively close or are they wide-ranging? COMMISSIONER APPLEBAUM: There is no 17 quick answer to that question. I have seen gigantic distortions in bid responses where the low bidder has left enormous amounts of money on the table -- 20, 30 percent differentials. Then we have other bids that are so close, they're within or percent. So there's no generalization that I can make on that -- to respond to that question. We have both. We have some that are extremely close 58 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 and some that are extremely --
You have this thing called "the lowest responsible bidder," but sometimes somebody comes in with a ridiculous number that we know that person can't meet that goal. COMMISSIONER APPLEBAUM: Right. There's a law in the world of public works that if a bidder ends up making a serious mistake and he has underbid by a significant amount of dollars, he can within hours notify our office and is 13 given the opportunity to prove to the Operating 14 Department and the Procurement Department that 15 they truly did make a mistake with their work 16 papers and with their documents. And if they 17 have, we will release them from that bid 'cause 18 they're not -- it's a non-responsive bid. 19 But generally speaking -- 20
Are they then 21 allowed to resubmit? 22 COMMISSIONER APPLEBAUM: No. He's put 23 away and we then would award to the next bidder. 24
All right. You say that in some cases, it's between and percent. 59 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 Is that the majority of cases? COMMISSIONER APPLEBAUM: I would say in the majority of cases, the bid responses are usually within reasonable ranges, but there are some bids that are gigantic splits.
Right, but the majority are within -- COMMISSIONER APPLEBAUM: The majority are within reason.
Okay. If the -- most of the respondents and I guess you guys can help me on this also -- for these various RFPs, do you get a sense that if it's a local respondent, that they more than likely will have local residents on their payroll? COMMISSIONER APPLEBAUM: No. 18
Or housing. A large number of the contractors are non-local and they employ a large number -- I'd say maybe more than 60 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 half of their permanent workforce are non-local in general. So in answer to your question, the assumption that a local contractor will employ local residents, the number of local contractors participating, maybe it's half, 60, 70 percent, but a large number of the contracts -- successful contractors are non-local contractors.
When you're saying "local," are you referencing the City of Philadelphia or local in the region?
I would say Philadelphia County and the surrounding counties.
Let me be more specific. If there's a business that has a business, say, at Brad and Champlost, all right, will his workforce traditionally be from the City of Philadelphia? Or would it be weighted towards having a workforce from the City of Philadelphia?
Councilman, if it's a commercial project, we have no way to tell, even if it's at Broad and Champlost and he's drawing from union labor, union labor is a metropolitan area. Unless you have -- 61 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181
Well, if you do wage compliance, don't you have a sense of where they --
No, we don't. The Minority Business Enterprise Council does not do wage compliance. I don't know if Housing does.
Councilman Clarke, I don't see the day-to-day workforce demographics for housing projects, but Michael Bell -- I can give 62 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 you that information really quickly. Where the number of local residents on -- for the local contractor, we can look at the housing projects, I can go back and ask Michael, if you give me a day or two, and answer this question generally. The projects that we send to you on a monthly basis, why don't we -- I can have Michael go through those. Well, the report shows -- well, the reports that we submitted to you on monthly basis have one list, resident versus nonresident.
It lists the project, the individual contractor, and I think it gives a person's name and address.
So you should be able to -- let me tell you where I'm going with this. In my limited interaction with contractors here and there, it's -- I've gotten a sense that if the contractor is a contractor in the City of Philadelphia, his workforce is, more often than not, a Philadelphia workforce, and that's just 63 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 been my history in interacting with contractors. And I'm trying to get a sense that if somehow -- and I'll actually have a bill coming down the pike, if somehow we have a local contractor, the likelihood of them having local participants on their workforce is more likely than not.
It's really going to depend on the size of the project as to the level of local residents he has. The smaller it is, the more prevalent that that will occur. The larger it is, it's just the opposite. Because he has to draw from the trade unions. And unless you consider Philadelphia SMSA as local, then he draws from the SMSA first, Pennsylvania second, Delaware, New Jersey, and that and far. . .
And that's been my experience on the commercial projects. Most of the commercial projects are -- the contractors are regional, the workforce is drawn regional and sometimes national. So that's -- Mr. Roundtree's comment, I can just second what he's just said. When you have prevailing wages requirements, you have 64 11/14/00 COMMERCE/EC. DEV. - BILLS 000180, 181 non-local contractors and a majority of the workforce is going to be non-local. And that's in Philadelphia and in the metropolitan area. For example, just look at the Ritz, and this is just through August, but 35 -- 39 percent of the workforce, these are workers, were from the Philadelphia surrounding suburban areas, and 9 percent was from New Jersey. So. . . 10
All right. Can you 11 just kind of give me -- just take a list, and it 12 could be small contractors, if you're saying that 13 the likelihood of small contractor, more often 14 than not, they will have local people. I'd just 15 like to see that in writing 'cause I'm going 16 somewhere else with another bill as it relates to 17 procurement practices. 18
I will commit to work 20 with Kevin Brooks' office to get that to you, 21 Councilman. 22
All right, great. 23 Thank you. 24 Thank you, Mr. Chairman. 25
Thank you, 65 11/14/00 COMMERCE/EC. DEV. - PUBLIC MEETING Councilman. If there are no further questions, we're going to move into a public meeting in order to take action on these two particular bills. (No further questions.)
Seeing none, we'll adjourn the public hearing and move into a public meeting. - - -
I'd like to ask for a motion on Bill No. 180 and I would ask that Councilman Ortiz, if you would make an appropriate motion, with a suspension of the rules, I would appreciate it.
Mr. Chairman, I move that Bill No. 180 be moved out of committee with a favorable recommendation and a recommendation that the rules of Council be suspended so as to permit hearing at the next session of City Council. (Duly seconded.)
It's been moved and properly seconded. All in favor will signify by saying aye. 66 11/14/00 COMMERCE/EC. DEV. - PUBLIC MEETING Any opposed, say nay. The ayes have it. The Chair calls on Councilman Clarke for a motion on Bill No. 181.
Thank you, Mr. Chairman. I make a motion that Bill No. 181 be reported out of committee with favorable recommendation and a suspension of the rules as to allow first reading at our next session of Council.
It's been moved and properly seconded with a motion on Bill No. 181. All in favor, signify by saying aye. Any opposed, say nay. The ayes have it. Bills No. 180 and 181 both have been reported out of committee with a favorable recommendation and rules suspensions. There's no further business before the committee. Thank you very much. (Adjourned at 3:45 p.m.) - - - 67 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 Tuesday, November 14, 2000, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT BILL NO.'S 000180, 000181 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter